Why Boeing Stock Just Dropped
Key Points
Boeing says a recent software update introduced a "glitch" into its 737 MAX autopilot.
Boeing says there is no "safety issue" involved.
The FAA and airlines aren't so sure.
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On a red day for the stock market, Boeing (NYSE: BA) stock is performing worse than most.
Shares of America's most famous plane-maker tumbled 4.8% through 11:10 a.m. ET Monday after The Wall Street Journal reported that Boeing has identified a new "software glitch" on its 737 MAX airliners "that could cause an automated navigation feature to fail."
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Boeing's bad news
WSJ reports that the glitch relates to the airplane's autopilot function, which may fail to perform as intended when a pilot misses a first approach on landing and inputs a new flight path to try again -- requiring the pilot to land the plane manually instead.
Boeing denies that the glitch poses any "safety risk," but is already working on a patch regardless. The Federal Aviation Administration is also looking into the issue.
How bad is this for Boeing?
As the Journal reports, at least two big Boeing customers, Southwest Airlines and United Airlines, have told Boeing they won't accept delivery of any new 737 MAX airplanes with the buggy software installed.
The good news is that the glitch was apparently only introduced in the most recent software update, and one temporary fix would be to reinstall the previous software version -- sans glitch. A bigger issue may be what to do with the 2,422 Boeing 737 MAX 8 and 9 models already flying around the world, some of which may have the flawed software and some of which may not yet have the software update installed.
Boeing is hoping to get the software figured out and a patch issued by "early 2028," so investors can expect this issue to linger awhile longer. Fingers crossed that Boeing is right, there's no "safety risk" in the meantime -- and nothing bad happens that can be traced to this now-known problem.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.
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