On Monday, The New York Times reported that the Federal Aviation Administration's (FAA) audit of Boeing's (NYSE:BA) 737 MAX production failed 33 of 89 tests.
The publication, citing an FAA presentation it has viewed, said the wide-ranging investigation revealed the jet maker failed a check that dealt with the component that blew off the Alaska Airlines jet in January.
After a 3% decline on Monday, Boeing shares are down 1.1% premarket Tuesday.
Meanwhile, the NYT said supplier Spirit AeroSystems (NYSE:SPR), which makes the fuselage for the MAX, passed six of 13 audits and failed the rest, while the audit focused on the door plug uncovered five problems, with one the one dealing with the installation of the component failing.
The audit report expressed concerns over the level of expertise of the technicians who carried out the work. Additionally, the report stated that the company failed to adequately determine the knowledge necessary for the operation of its processes.
In a recent note to clients, Bank of America analysts maintained a Neutral rating and $225 price target on Boeing, telling investors that the company's March deliveries and production set off at a "sluggish pace."
"According to Aero Analysis Partners/AIR (AAP/AIR), Boeing's March deliveries have begun at a sluggish pace, with only five 737 aircraft deliveries, in contrast to the eight delivered during the same period in 2023," said BofA. "Moreover, despite the theoretical resolution of the door plug issue, AAP/AIR highlights that not a single 737-9 has been delivered since the beginning of the year."
The firm also said Boeing's February production is expected in the high teens, albeit below January levels.