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April 9, 2021 12:45 PM, EDT

Boeing Grounds Dozens of 737 Max Jets on Manufacturing Flaw

A Boeing 737 Max sits on the tarmac in Farnborough, U.K., in July 2018. (Simon Dawson/Bloomberg News) A Boeing 737 Max sits on the tarmac in Farnborough, U.K., in July 2018. (Simon Dawson/Bloomberg News)

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Boeing Co. grounded dozens of 737 Max jets to repair an electrical flaw that emerged just months after the planes were cleared to return to the skies, forcing airlines to cancel flights and line up replacement aircraft.

U.S. carriers including Southwest Airlines Co., American Airlines Group Inc. and United Airlines Holdings Inc. parked a combined 67 of the workhorse planes April 9, about a third of the Max jets currently in service worldwide. The manufacturing glitch affects aircraft at 16 airlines, not the entire Max fleet, Boeing said in a statement.

The U.S. Federal Aviation Administration said the potential lapse “could affect the operation of a backup power control unit,” adding the agency is in contact with the airlines and the manufacturer.

While the problem isn’t related to the flight-control system that was at the center of the Max’s nearly two-year grounding, it takes the luster off the comeback of Boeing’s most important product. The Chicago-based plane maker has been picking up orders for the Max since U.S. regulators lifted a grounding mandate in November, and the company recently secured a bumper commitment from Southwest, which had publicly flirted with a smaller single-aisle jet made by Airbus SE.

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The issue appears mostly limited to 737 Max planes delivered since the FAA grounding was rescinded, according to one analyst. “The fix seems to be well understood and timing would depend on availability of technicians and equipment access,” Sheila Kahyaoglu, an analyst at Jefferies with a buy rating on the stock, wrote in a research note to clients. “Changing the equipment could take hours or days to fix, a modest disruption.”

Boeing fell 1.4% to $251.36 as of 11:17 a.m. in New York, the biggest drop on the Dow Jones Industrial Average. The shares had gained 19% this year through April 8, double the Dow’s increase.

The newest Max disclosure comes as Boeing contends with quality lapses and manufacturing flaws that have damaged its reputation and affected its 787 Dreamliner, KC-46 military aerial tanker and Starliner spacecraft. The aerospace titan also has fired and sued a subcontractor on another high-profile project: turning two 747 jumbo jets into the next Air Force One fleet to transport U.S. presidents.

The latest issue was discovered by Boeing mechanics “on a production airplane during normal build activity,” according to a message to customers that was reviewed by Bloomberg. Operators were notified just hours after a separate email touting the growing number of flight hours and planes in service since the grounding ended in the U.S.

Boeing declined to say how many aircraft were affected of the 183 Max jets that have been put back into service since December. About 20 operators have been conducting some 400 daily flights, according to a separate memo.

“Boeing has traced the issue to a production change made in the installation process that occurred after our last aircraft was delivered before the fleet grounding in March 2019, which means 24 of our 737 Max aircraft are not affected by this issue,” David Seymour, American’s operations chief, said in a message to employees April 9.

Boeing’s wouldn’t estimate how much time the repairs will require. “It could take a matter of hours or a few days,” Boeing spokeswoman Jessica Kowal said.

Airline Impact

Southwest said it pulled 30 Max 8 jets from its schedule, adding that it is flying only 15 of its 58 Max planes daily and expects minimal disruption to its operations. The Dallas-based carrier said it hasn’t experienced operational problems related to the electrical issue identified by Boeing.

American removed 17 Max planes from service, United stopped flying 16, and Alaska halted flights by four.

The 737 Max, Boeing’s latest generation of the single-aisle workhorse, was grounded after two crashes five months apart in Indonesia and Ethiopia in 2018 and 2019, in which 346 people were killed.

The jet was cleared to fly again by U.S. regulators in November, followed by regulators in Europe and most other major markets aside from China and India.

Julie Johnsson, Siddharth Philip and Mary Schlangenstein were the primary contributors to this report.

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