Boeing has broadened inspections of its newly produced 787 Dreamliners after finding more manufacturing defects in areas of the aircraft where they hadn’t been initially detected, the Wall Street Journal has learnt citing industry and government officials.
Although Boeing (BA) engineers and US air-safety regulators didn’t identify the newly discovered issue as an imminent safety hazard, it is still likely to affect a Federal Aviation Administration (FAA) review of 787 production safeguards sparked earlier this year by other defects, according to the WSJ report.
The extended quality-control checks, covering the entire fuselage of the planes rather than just certain sections around the tail, are why inspections are taking longer than expected. As a result, no Dreamliners were delivered in November.
Boeing had previously disclosed the inspection and delivery delays on Dec. 4 without specifying the reasons for them.
The defects in question are spots where the surface of the 787’s carbon-composite fuselage isn’t as smooth as it should be, a Boeing spokesman told the WSJ. Such areas can create tiny gaps where fuselage sections are linked together and could lead to premature structural fatigue, which can require extensive repairs. The spokesman said the inspections have pinpointed areas where assembly of portions of the 787 fuselage “may not meet specified skin flatness tolerances.”
The company found the latest issue through strengthened quality-assurance practices over the past year, when other defects had been identified, the Boeing spokesman said. Additionally, he said the company has asked suppliers to perform similar checks. “These findings are part of Boeing’s review of assembled 787 aircraft to ensure each meets our highest quality standards prior to delivery to customers,” he told the WSJ.
The delivery delays are another setback for Boeing, which is already grappling with the financial fallout caused by the pandemic-led halt in air travel demand. Earlier this month, the US planemaker disclosed its intention to further cut 787 production next year due to weak demand and the backlog of parked planes.
Meanwhile, BA stock has seen some relief, advancing 13% over the past month as the FAA suspended a 20-month grounding order that halted commercial operations of its 737-8s and 737-9s. (See BA stock analysis on TipRanks)
Jefferies analyst Sheila Kahyaoglu last week lifted BA’s price target to $275 from $250 and reiterated a Buy rating on the stock as she expects the company to restart 737 Max deliveries next year, with 180 delivered in 2021 out of the total 328 deliveries forecasted for the period.
Following the FAA’s and Brazil’s approval, Max deliveries “could be imminent,” which could provide upside to the 2020 estimate for zero Max deliveries expected by Kahyaoglu.
The rest of the Street has a cautiously optimistic Moderate Buy analyst consensus based on 9 Buys, 8 Holds, and 2 Sells. That’s with an average analyst price target of $213.81, indicating 6.5% downside potential over the coming 12 months.
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