Here’s why Boeing shares are down today

Actions of Boeing (BA -4.40%) were trading more than 4% lower as of 1:45 p.m. ET Tuesday after news broke that the aerospace and defense giant had suspended flight tests of its 777X jet.

Big news from Boeing

As reported by aviation news service The Air Current, Boeing has grounded the test fleet for its latest wide-body jet after routine inspections of one of the planes found that a key mounting component of one of the its engines failed. This is disappointing for investors for several reasons.

First, it’s another indication of existing quality problems at Boeing. Second, it raised the prospect of a delay in production and deliveries of the 777X. Third, it could have cash implications for the company—the last thing it needs right now. Finally, customer concerns about the new plane could lead to a delay in 777X orders.

The change in tone around the program stands in stark contrast to Boeing’s outlook a few weeks ago. On the company’s Q2 earnings call, now-former CEO Dave Calhoun gleefully noted that in July, Boeing “received the type inspection authorization, TIA, for the 777-9 and began flight testing with FAA personnel on board the aircraft. Our team has put the 777-9 test fleet through more than 1,200 flights, 3,500 flight hours in a wide range of regions and climates.”

What it means for Boeing investors

Tuesday’s stock selloff may be an overreaction, as it’s unclear whether there will be any significant fallout from the problem or the test flight pause. However, the market’s backlash illustrates the challenges ahead for new CEO Kelly Ortberg as he tries to restore confidence in the company.

Image source: Getty Images.

It’s not uncommon for new airplanes to have parts redesigned and replaced during development, and the key decision makers in this process are at Boeing, the Federal Aviation Administration, and the airlines. Right now, though, investors don’t want to hear about more quality problems at Boeing.