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MarketScreener Homepage  >  Equities  >  Nasdaq  >  American Airlines Group Inc.    AAL

AMERICAN AIRLINES GROUP INC.

(AAL)
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Cracks found on 38 of 810 Boeing 737 NG jets inspected globally

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10/11/2019 | 01:03am EDT
Boeing employees work on the tail of a Boeing 737 NG at the Boeing plant in Renton, Washington

WASHINGTON (Reuters) - Boeing Co said on Thursday that airlines had inspected 810 of the company's 737 NG jets around the world and found 38 structural cracks requiring repair and replacement of the affected parts.

The planes will be grounded until the repairs are made, Boeing and airline officials said. Nearly 5% of inspections have found cracks in a "pickle fork" - a part that attaches the plane's fuselage, or body, to the wing structure and manages forces.

The 737 NG is the third-generation 737 and version before the now-grounded 737 MAX, which is not impacted by the cracking issue.

On Wednesday, Southwest Airlines Co and Brazil's Gol Linhas Aereas grounded at least 13 737 NG airplanes after U.S. regulators ordered urgent inspections. Indonesia's Sriwijaya Air said on Friday that it had grounded two planes.

The U.S. Federal Aviation Administration (FAA) last week told U.S aircraft operators to inspect 165 older 737 NGs for structural cracks, but it now appears the actual number of planes covered is more than 200.

The FAA said late on Thursday "a small number of aircraft based in the United States have been removed from service while Boeing develops instructions for customers to repair or replace the affected parts."

The agency added it "is working with the manufacturer and other international aviation safety regulators to better understand the factors that led to the formation of the cracks."

Southwest spokeswoman Brandy King said of more than 200 high-use airplanes it had found cracks on two planes and grounded them. She declined to say if cracks had been found on any other jets but said the airline planned an update next week.

"We do not have a timeline for when the airplanes will be returned to service, we are working with Boeing to schedule the upcoming repairs," King said.

Boeing shares fell 1% to close at $371.00 on Thursday.

American Airlines and United Airlines said earlier this week they have not seen any cracks on their airplanes.

Raymond James analyst Savanthi Syth wrote in a research note Thursday that the findings from the 737 NG inspections could "potentially take up to 4% of capacity off-line between mid-Oct and mid-Dec."

Planes with cracks "may need to be taken out of the fleet for up to 60 days for maintenance," Syth said.

The FAA last week said inspections would look for "cracking of the left and right hand side outboard chords of frame fittings and failsafe straps."

It added that the cracking "could adversely affect the structural integrity of the airplane and result in loss of control of the airplane."

Aircraft with more than 30,000 cycles must be inspected within seven days, while planes between 22,600 and 29,999 cycles must be inspected within 1,000 cycles, which typically correspond to the number of flights. In total, 1,911 U.S. 737 NGs are covered by the FAA directive.

(Reporting by David Shepardson in Washington; additional reporting by Jessica Damiana in Jakarta; Editing by Tom Brown and Matthew Lewis)

By David Shepardson

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. 1.04% 28.22 Delayed Quote.-13.02%
GOL LINHAS AÉREAS INTELIGENTES S.A. -1.56% 35.44 End-of-day quote.43.43%
UNITED AIRLINES HOLDINGS, INC. 0.70% 90.085 Delayed Quote.6.84%
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Financials (USD)
Sales 2019 45 960 M
EBIT 2019 3 722 M
Net income 2019 2 073 M
Debt 2019 24 808 M
Yield 2019 1,45%
P/E ratio 2019 6,28x
P/E ratio 2020 5,02x
EV / Sales2019 0,81x
EV / Sales2020 0,75x
Capitalization 12 436 M
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Number of Analysts 21
Average target price 36,89  $
Last Close Price 28,22  $
Spread / Highest target 94,9%
Spread / Average Target 30,7%
Spread / Lowest Target -15,0%
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William Douglas Parker Chairman & Chief Executive Officer
Robert D. Isom President
Derek J. Kerr Chief Financial & Accounting Officer, Executive VP
Maya Leibman Chief Information Officer & Executive VP
Kevin Brickner Senior Vice President-Technical Operations