Aerospace major Boeing’s (NYSE:BA) rising woes are forcing some of the company’s biggest customers to reevaluate their growth forecasts this year. Low-cost airline Southwest Airlines (NYSE:LUV) lowered its seating capacity forecast and stated that it would have to reevaluate its FY24 guidance. The airline cited fewer Boeing aircraft deliveries this year as a reason for lowering its seating capacity.
Meanwhile, Alaska Airlines (NYSE:ALK) stated that its FY24 seating capacity estimates remain uncertain due to the rising scrutiny by the Federal Aviation Administration (FAA) and Department of Justice (DOJ) on Boeing that has impacted aircraft deliveries.
Another airline major, United Airlines (NASDAQ:UAL), has asked Boeing to hit a pause on the production of 737 Max 10 jets and is switching to another smaller variant of the narrowbody airplane. Moreover, UAL is placing orders with Boeing’s rival Airbus (OTHER OTC:EADSY) to tide over the shortfall in plane deliveries. United has also paused hiring of pilots as it grapples with this problem.
Boeing’s Failed Audits and Declining Plane Deliveries
The New York Times reported that a six-week FAA audit of Boeing’s production of the 737 Max aircraft found that the company failed 33 of the 89 audits. Boeing, along with its supplier Spirit AeroSystems (NYSE:SPR), failed to meet the quality control requirements.
In the midst of this scrutiny, Boeing has reduced the production of its 737 Max aircraft. In February, the company’s shipments of these narrow-body MAX jets dropped to 17 from 25 in January, marking a significant decrease compared to the levels in November and December, which were twice as high.
Is JETS a Buy or Sell?
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