Boeing grounds 777X fleet as tests reveal damage to jet structure, shares down

Boeing (NYSE:BA ) announced on Monday that it has halted flight tests of its 777X aircraft after discovering structural damage in one of the wide-body planes.

During a routine post-flight inspection of a 777X test aircraft, a critical failure was identified in the structure that mounts the engine to the aircraft.

The issue, initially detected on Boeing's third 777X test aircraft, was later found on the other two planes used in testing. The failure was traced to a crack in the thrust link structure, prompting Boeing to temporarily ground the entire 777X test fleet while the problem is addressed.

"We view today's grounding as a setback for Boeing's flight tests and eventual certification timeline of the 777X,” RBC Capital Markets analysts commented.

“Although we are not yet aware of a remediation timeline, investors are likely to view the grounding as a push to the right for the 777X certification."

Boeing shares fell more than 1% in premarket trading Tuesday.

According to RBC analysts, the grounding could potentially impact the 2025 entry into service (EIS) for the 777X.

Boeing began test flights for the aircraft on July 12th, but the unexpected halt is likely to raise concerns among investors. While analysts believe that an early 2025 certification or EIS was already unlikely, Boeing had recently reaffirmed during its 2Q24 earnings call that it still expected the first delivery to occur in 2025.

"The grounding could push 777X delivery expectations to the right, and potentially into 2026 for investors,” analysts continued.

“As we have seen with recent FAA certifications, especially the resumption of deliveries for Boeing aircraft, we believe the 777X program is likely to see a prolonged approval period. Even if flight testing resumes in the near term, the current grounding could limit investor confidence in the program."

The news of test halts, initially reported by The Air Current, comes at a time when Boeing’s leadership, including newly appointed CEO Kelly Ortberg, is working to steer the company beyond a safety crisis that began with a doorplug blowout earlier this year.

Source: Investing.com