(Bloomberg) -- Boeing Co. shares extended their 2024 rout after analysts and a key customer voiced concerns that scrutiny of planemaker's manufacturing since a Jan. 5 near-disaster with a 737 Max 9 could lead to a slowdown in aircraft deliveries.
The US planemaker declined 5.4% as of 10:08 a.m. in New York, bringing the year-to-date drop to around 21%. Markets resumed trading on Tuesday following the three-day holiday weekend to honor civil rights leader Martin Luther King Jr.
Analysts at Wells Fargo cut their rating on Boeing to equal-weight from overweight, citing an increased risk that a growing number of regulatory checks on the company's manufacturing quality will have an impact on the pace of production or deliveries.
Similar concerns were voiced separately by Ryanair Holdings Plc Chief Executive Officer Michael O'Leary — one of the biggest customers for the 737 Max — at an event in London on Monday.
“I think the risk is that there will be further delivery delays, that Boeing management will get distracted in Seattle or there'll be new processes or something,” O'Leary said in an interview.
The Federal Aviation Administration has grounded most Max 9 jets, a measure it intends to keep in place until extensive inspections are complete. The air-safety agency is investigating manufacturing practices at Boeing in the wake of the accident, when a door-sized fuselage panel tore off of Alaska Airlines Flight 1282 shortly after takeoff.
The FAA also said it will increase monitoring of so-called “in-service events” on the Max 9, and plans to audit Boeing's production line as well as those of its suppliers.
“Given BA's recent track record, and greater incentive for FAA to find problems, we think the odds of a clean audit are low,” Wells Fargo's Matthew Akers wrote in a note to clients.
Boeing is stepping up internal inspections as well, and will grant customers more access to its factories, commercial chief Stan Deal told employees in a memo released on Monday.
O'Leary said Tuesday he was doubling Ryanair engineering staff onsite at Boeing's factory in Washington and at its biggest supplier, Spirit AeroSystems Holdings Inc., in Wichita, Kansas.
The move follows Alaska Air Group Inc.'s decision over the weekend to expand quality checks on Boeing production. China, meanwhile, will hold back on an expected restart of 737 deliveries, Bloomberg reported.
Deal said Boeing will also bring in outside experts to review its quality controls and suggest improvements, in response to an FAA grounding on the Max 9 variant.
--With assistance from Katrina Compoli.
(Updates with start of regular trading, Ryanair comment)
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
