Boeing shares continued to slide Tuesday after the company announced it would temporarily halt production of the troubled 737 Max.
Suppliers’ stocks in both the United States and Europe were also lower on the news.
Boeing said late Monday that it will suspend 737 Max production for an indefinite period of time starting at some point in January. The company made the decision because of the continued uncertainty about when the plane will be allowed to fly again.
Boeing (BA)’s stock was down more than 1% in early trading Tuesday. Shares have fallen 7% since FAA Administrator Stephen Dickson said last Wednesday that there was no way his agency would approve the plane to fly again by the end of the year. Up until then Boeing (BA) had been hoping to get FAA approval by that target date. The company had warned that a shutdown of 737 Max line was possible if the approval was pushed to 2020.
Boeing has been building the the 737 Max even while the jet has been grounded. That happened in March following two fatal crashes that killed 346 people. It continued to build the jets partly to protect against disruption to its supplier base. But it has not been able to deliver the completed jets or get most of the cash that comes from a sale. So the jets have been parked in Washington State and Texas awaiting approval to fly in commercial service once again.
Spirit AeroSystems, a supplier that gets 79% of its revenue from Boeing, was hit particularly hard from the announcement. Its stock fell 1.5% in early trading Tuesday on Boeing’s news, and its shares are down about 5% since last Wednesday. Spirit, which is Boeing’s largest supplier, makes the fuselage for the Max, among other items.
Shares of French supplier Safran (SAFRF) fell 2.4% in Paris trading Tuesday. It makes some of the engines used on the 737 Max, as well as wheels, brakes, wiring and seats.
Shares of UK supplier Senior Plc tumbled about 9% in London trading. The company gets 12% of its revenue directly from Boeing, and at least that much from other Boeing suppliers, such as Spirit and General Electric. It put out a statement saying that its earnings outlook for 2019 remains unchanged, but it couldn’t yet provide a forecast about the impact of Boeing’s decision on its 2020 results.
GE’s stock was down 0.6% in early trading Tuesday after a 1.5% drop in Monday trading on news that Boeing would halt production. GE makes an engine used on the 737 Max.