Boeing Co. (BA) - Get Report shares traded lower Tuesday after U.S. regulators said they were investigating manufacturing flaws in some of its 787 Dreamliner planes that media reports suggest could go back at least a decade.
The Federal Aviation Administration said Sunday it was looking into issues with the Dreamliner's fuselage, just days after the planemaker grounded eight of the giant jets, which were made in South Carolina, after finding flaws that raised questions about their structural integrity and the risk of potential in-flight failures. The Wall Street Journal reported Sunday that issues with the Dreamliner's production could go back at least ten years.
"The agency continues to engage with Boeing," the FAA said Sunday. "It is too early to speculate about the nature or extent of any proposed Airworthiness Directives that might arise from the agency’s investigation."
Boeing shares were marked 4.9% lower in early afternoon trading Tuesday to change hands at $162.70 each, a move that would trim the stock's six-month gain to around 25%.
Boeing said on August 28 that it had identified "two distinct manufacturing issues in the join of certain 787 aft body fuselage sections, which, in combination, result in a condition that doesn’t meet our design standards" as it pulled the eight aircraft, which reports said were used by United Airlines (UAL) - Get Report, Air Canada and Singapore Airlines
Boeing posted a wider-than-expected second quarter loss in late July thanks in part to the impact of COVID-19 and the ongoing grounding of its troubled 737 MAX jet.
The planemaker also said it would delay the ramp-up of production on the 737 MAX, which has been grounded by regulators around the world since March of 2019, adding that it will also end production of its iconic 747 jumbo jet in 2022. Production cuts are also slated for the 787 and 777 jet programs.
CEO David Calhoun also hinted at further job cuts, following an earlier plan to reduce its workforce by around 4,000, in a letter to employees following the second quarter earnings.
"We remained focused on the health of our employees and communities while proactively taking action to navigate the unprecedented commercial market impacts from the COVID-19 pandemic," Calhoun said. "We're working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side."