We expect that the recent directive from FAA Administrator Mike Whitaker signaling a shift from an audit approach to a direct inspection approach will have a substantial impact on production processes. The revelation that Boeing removed a door plug (enabling subtier Spirit Aerosystems to rectify incorrect fastener installations) then appeared to have re-installed the plug without properly torquing the bolts suggests that increased government and customer oversight will likely extend deeper into the supply chain. Furthermore, the FAA has formally instructed Boeing not to increase production rates without prior approval. These developments collectively affirm our significant downward adjustment in production rates for the 737 in the current year and in the next. Adding to the challenge, the Collective Bargaining Agreement between Boeing and the IAM is set to expire on September 12 of this year.
Read More: FAA Halts MAX Production Growth and Door Plug Failure Investigation
