Manufacturing vs. design flaw? Why Boeing investors should care
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Boeing CEO David Calhoun (BA) told staff that the company needs to acknowledge its "mistake" in regards to an Alaska Airline flight that was force to make an emergency landing after a door plug blew off the jet.
Citi Aerospace and Defense Lead Analyst Jason Gursky tells Yahoo Finance Live that the issue appears to be manufacturing-related, which is good news for shareholders. "If it was indeed design-related, we'd probably have a bigger problem on our hands, here, because they would have to go back and redesign the aircraft and get it back through the certification process and we'd probably be facing much longer delays," Gursky says.
To find out how Gursky thinks Boeing needs to fix the ongoing manufacturing issues the company has been seeing, watch the video above.
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
Editor's note: This article was written by Stephanie Mikulich
Video Transcript
BRAD SMITH: Boeing CEO Dave Calhoun is finally speaking at a 737 Max factory in Washington. He said the company will approach the situation by acknowledging their mistake after a door plug on an Alaska Airlines flight blew out at 16,000 feet in the air as the CEO tries to salvage the situation. Our next guest says that the incident is manufacturing issue, which should be considered when looking at who bears responsibility.
We've got Jason Gursky, who is the Citi Managing Director and Aerospace and Defense Lead Analyst to discuss more. Jason, thanks so much for taking the time to help us dive further into this as we've been tracking this story and any new developments throughout the week. Most notably here in what you're mentioning in the manufacturing side, what needs to change from a Boeing manufacturing perspective that now again has the Max front and center?
JASON GURSKY: Yeah, look, I think the first thing we need to do is make that delineation between a manufacturing issue versus a design issue. And this really does look like it's a manufacturing issue and not a design issue with the aircraft.
If it was indeed design-related, we'd probably have a bigger problem on our hands here because they'd have to go back and redesign the aircraft and get it back through a certification process. And we'd probably be facing much longer delays.
On the manufacturing side of things, you know, it looks like there's the potential here, some poor quality. We've seen some quality escapes at Boeing and its suppliers here over the last 12 months. You know, last spring, it was the tail section of the 737 fuselage. And then over the summer, it was the bulkhead section that had some quality escapes. And this looks like yet another one.