Boeing's 777 Freighter Output Stalled Two Months by Supplier Dispute
BA is trading near its 52-week low of $176.77 (6.4% above the low).
Summary
Boeing's dispute with Florida-based supplier Vaero has halted 777 freighter production for nearly two months and disrupted 767 and KC-46 tanker output, per workers and court filings. Boeing's August complaint said Vaero stopped delivering the sole-source trailing-edge rib kit and that the stoppage was costing as much as $6.5 million a day. A settlement was reached in late September, but 777F production has not restarted, and Boeing pulled two partially assembled freighters off the final assembly line. Boeing has delivered 21 777 freighters this year and has a handful with pre-dispute wings that could still ship before year-end. The disruption is modest against Boeing's overall backlog but adds execution risk to a widebody line in strong demand; FedEx, identified by Reuters as the destination for one affected aircraft, did not comment.
Updates
· Seeking Alpha — Boeing is seeking to manufacture the affected trailing-edge rib components internally to reduce dependence on Vaero, and the newer 777X program using different wing technology is unaffected.
At the time of this announcement, BA was trading at $188.14 on NYSE in the Industrial Applications And Services sector, with a market capitalization of approximately $148.9B. The 52-week trading range was $176.77 to $254.35. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Reuters.