Just when it looked like Boeing (BA 366.03, -8.91, -2.4%) was making a big stride toward getting its 737 MAX planes on track for flight certification, it got tripped up by an FAA finding that there is another issue that needs to be fixed and which is different from the software fix Boeing is working on to correct its MCAS flight-control system.
This finding was disclosed last night in a Form 8-K SEC filing, which contained only a brief summary of the situation that Boeing said is "a specific condition of flight, which the planned software changes do not presently address."
The finding, which Boeing agrees with, has led investors to think the 737 MAX problem could run deeper than it currently does, which is raising new questions about Boeing's earnings prospects. The latter is at the heart of today's decline.
According to a Wall Street Journal article, this latest issue could possibly go beyond a software tweak and involve replacing a computer chip in all 737 MAX planes if a change to the software doesn't solve the problem.
Shares of BA had made a nice move, rebounding as much as 15% from their June 3 low and pushing back above their 50-day and 200-day moving averages. The stock is back testing its 200-day moving average (364.66) with today's decline and found some support after hitting an intraday low of 362.40.
The latest news is a noteworthy setback in Boeing's re-certification effort for the MAX, as well as a setback for airlines that are eager to get their 737 MAX planes flying again. United (UAL 86.51, +1.18, +1.4%) said today it has extended its 737 MAX cancellations until September 3 while Southwest Airlines (LUV 51.34, +0.64, +1.3%) pushed its 737 MAX cancellations through October 1.
Boeing's stock is reacting accordingly to the new uncertainty, which has compounded the uncertainty that already existed with regard to the ultimate costs involved in getting the 737 MAX back in the air.