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: Boeing’s new 737 Max problem is ‘easy fix,’ analyst says

0

Boeing Co. stock traded lower Friday after the aerospace and defense company late Thursday flagged a new problem with 737 Max jets, with at least one Wall Street analyst saying that a fix would be easy and cause “minimal disruption” for Boeing customers.

Southwest Airlines Co.
LUV,
-1.04%
,
one of the airlines affected, has removed some 30 737 Max jets from its schedule, or slightly more than half of its 737 Max fleet, swapping them with other jets for the flights.

The 737 Max jets were grounded world-wide for nearly two years starting in March 2019, following two deadly crashes less than five months apart.

Earlier this year, Boeing
BA,
-1.56%

was ordered to pay more than $2.5 billion to settle U.S. fraud charges over the problems with the jet family, one of the many financial and legal fallouts it has had to face in connection with the crashes, ultimately linked to a faulty antistall system.

See also: United, Alaska stocks get upgrade on ‘clear path to reopening’ for air travel industry

Boeing warned 16 customers, whom it did not disclose, about the issue, which is related to the plane’s electrical power system. It said it was working “closely” with U.S. aviation regulators to correct it.

Analyst Sheila Kahyaoglu at Jefferies said in a note Friday that the issue seems to be “well understood” and timing would depend on the availability of technicians and equipment.

“Changing the equipment could take hours or days to fix, a modest disruption,” she said. Boeing’s leading alterations to aircraft “is not out of the norm, but would seem to get more attention given prior issues.”

Related: Frontier Airlines files for IPO, betting on a travel rebound

Besides Southwest, U.S. airlines that recently have gotten 737 Max after the jet family returned to the skies included Alaska Air Group Inc.
ALK,
-0.78%
,
American Airlines Group Inc.
AAL,
-1.32%
,
and United Airlines Holdings Inc.
UAL,
-2.41%
,
and overseas airlines include Brazil’s Gol Linhas Aereas SA
GOL,
-0.71%

and Panama’s Copa Holdings SA
CPA,
-1.17%
.

Boeing shares have gained more than 17% so far this year and 65% in the past 12 months, compared with gains of 9% and 47% for the S&P 500 index
SPX,
+0.21%

in the same periods.

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