Boeing Shares Dive as Legal and Technical Troubles Mount

On March 10, shares of Boeing (BA) fell 3.91%, marking a three-day decline totaling 9.20%. During the trading session, the price hit its lowest point since November 2024.

Last Friday, a U.S. federal judge ruled that Boeing must face a shareholder class action lawsuit alleging that the company overstated its commitment to producing safe aircraft and subsequently misled investors. Leonie Brinkema, a U.S. District Judge in Alexandria, Virginia, approved shareholders, led by the Rhode Island finance director, to proceed as a group against Boeing, seeking compensation for losses. These shareholders held Boeing stock within the period from January 7, 2021, to January 8, 2024. On January 5, 2024, a Boeing 737 MAX 9 operated by Alaska Airlines encountered an air emergency when an inset emergency door on the cabin side detached. This incident led the Federal Aviation Administration to limit the production of Boeing's best-selling aircraft and review its safety protocols.

Meanwhile, Boeing and the U.S. Air Force have halted deliveries of the KC-46A "Pegasus" tanker aircraft after cracks were found in two aircraft scheduled for delivery. This discovery has once again raised concerns about the troubled refueling platform's reliability. Structural cracks were detected in both the primary and secondary inner structures during pre-delivery inspections. This development affected two of the four KC-46As scheduled for delivery to the military delivery center, prompting the manufacturer to suspend deliveries while conducting a thorough investigation. The U.S. Air Force has confirmed that they are closely collaborating with Boeing to assess potential issues with the KC-46A aircraft and mitigate impacts on the fleet and production.

The KC-46A program has faced technical and quality control issues since it began. Even before its initial delivery in January 2019, the aircraft encountered significant challenges. Its Remote Vision System (RVS) had flaws that hindered crew members from safely guiding the refueling boom. Over time, additional defects emerged, including cargo tie-down malfunctions, fuel leaks, and issues with the refueling boom itself.

In 2019, the U.S. Air Force twice halted deliveries due to foreign object debris (FOD) found within the aircraft during production, which included misplaced tools and parts. This highlighted concerns regarding Boeing's manufacturing discipline. Technical failures with the KC-46A have incurred substantial financial expenditures for Boeing, amounting to billions of dollars. In January 2024, Boeing revealed an additional €1.7 billion in defense-related charges during the disclosure of its fourth-quarter 2024 earnings, €800 million of which was specifically related to the KC-46 project.

The KC-46A "Pegasus" tanker is a vital part of the U.S. Air Force's strategic air mobility forces, primarily tasked with air refueling, cargo transport, and medical evacuation missions. However, its development has been fraught with controversy, facing technical defects, cost overruns, and delivery delays. Despite these challenges, the KC-46A remains critical to the Air Force's strategic aerial mobility capabilities, and both the Air Force and Boeing are working diligently to address these issues to ensure the reliability and safety of the aircraft.