Boeing Faces Another Setback: Cracks Discovered in 777X Jetliner

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Boeing's turbulent year continues as the aerospace giant confronts yet another major issue. During initial test flights of its cutting-edge 777X jetliner, Boeing (NYSE: BA) discovered cracks in a critical structural component, adding to a growing list of setbacks for the company.

The Discovery
The cracks were identified during routine inspections following test flights in Hawaii. The affected component is the thrust link, a crucial part that connects the plane’s massive engines to the airframe. This link, made from heavy-duty titanium, is unique to the 777X and integral to the aircraft's overall integrity. The discovery of these cracks has forced Boeing to ground its entire 777X test fleet as engineers work to replace the faulty parts and analyze the root cause.

A Boeing (NYSE: BA) spokesperson commented, "During scheduled maintenance, we identified a component that did not perform as designed. Our team is replacing the part and capturing any learnings from the component and will resume flight testing when ready."

Financial and Reputational Impact
This latest incident comes at a time when Boeing (NYSE: BA) is already struggling with several other crises. The company’s stock has plummeted more than 30% this year, largely due to a series of safety and mechanical failures. Earlier in January, a door plug detached mid-flight from a Boeing 737 MAX 9 operated by Alaska Airlines, prompting the Federal Aviation Administration (FAA) to ground expansion plans for the 737 MAX.

The 777X, Boeing’s most advanced commercial aircraft, was initially slated to enter service in 2020. However, due to increased regulatory scrutiny and ongoing safety concerns, this date has been pushed back multiple times, now tentatively set for 2025. The latest discovery of cracks in a key component could delay the 777X's entry into commercial service even further, exacerbating Boeing’s financial woes.

The Bigger Picture
This incident is the latest in a string of safety concerns that have plagued Boeing in recent years, starting with the tragic crashes of two 737 MAX aircraft in 2018 and 2019. Those crashes, which claimed the lives of 346 people, triggered a global grounding of the 737 MAX fleet and resulted in Boeing agreeing to a $243.6 million fine and a three-year probation period as part of a plea deal with the U.S. Department of Justice.

In light of the new issues with the 777X, Boeing’s reputation is once again under scrutiny. The company, which once held an untarnished reputation for safety and innovation, is now viewed with increasing skepticism by regulators, airlines, and the flying public.

Technical Outlook
Boeing's (NYSE: BA) stock experienced a 4.2% decline at the close of Tuesday's trading session, and its Relative Strength Index (RSI) indicates an oversold condition at 46. Moreover, the stock is currently trading below the 50, 100, and 200 Moving Averages (MA), signaling a strong bearish trend. A bearish harami candlestick pattern is visible on the daily price chart, further indicating downward pressure. It's apparent that Boeing (NYSE: BA) has undergone a series of price corrections and has been confined within a falling wedge pattern for some time now. A potential bullish signal could occur if the stock manages to surpass the 200-day MA, signaling a potential reversal in trend.

Looking Forward
As Boeing (NYSE: BA) works to resolve the cracks in the 777X, the company faces significant challenges ahead. Not only must it address the technical flaws in its latest aircraft, but it also needs to restore confidence in its ability to deliver safe and reliable planes. With the aviation industry closely watching, Boeing’s next steps will be crucial in determining whether it can recover from this series of setbacks or if it will continue to struggle in the years to come.

For investors, the situation remains precarious. Boeing shares (NYSE: BA), which have already suffered steep declines, could face further downward pressure if the 777X’s issues lead to additional delays or safety concerns. The company’s ability to rebound from this latest mishap will depend on its response to the crisis and its capacity to regain the trust of both regulators and the public.