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Boeing stock drops after temporarily suspending 737 Max flights

  • Boeing temporarily suspended flights of its 737 Max narrow-body jetliners due to an engine problem.
  • The plane is powered by Leap engines made by CFM International, a 50-50 joint venture between General Electric and France's Safran.
  • Boeing shares dropped on the news, but regained some ground.

Boeing on Wednesday temporarily suspended flights of its 737 Max narrow-body jetliners due to an engine problem.

The plane is powered by Leap engines made by CFM International, a 50-50 joint venture between General Electric and France's Safran. The Boeing aircraft has been undergoing test flights for a number of months and is close to its first commercial deliveries.

"CFM notified us of a potential manufacturing quality escape with low pressure turbine disks in LEAP-1B engines delivered to Boeing," the aerospace giant said in a statement.

Added Boeing, "We are working with CFM to inspect the disks in question."

Boeing shares on Wednesday closed down 1.2 percent to $183.18. Earlier, the stock dropped as low as $177.18.

GE's stock ended down modestly.

"If the engine issue is indeed a quality issue and not a design issue, then it is likely to have a minimal impact to BA," Richard Safran, an industry analyst at Buckingham Research said in a research note. "It is also not likely to affect first delivery of the 737 Max or the production ramp."

CFM has been the sole engine supplier to the Boeing 737 aircraft models since the early 1980s. Last month, CFM said more than 7,400 Leap-1B engines had been ordered to power the 3,700 Max aircraft by 86 customers worldwide.

"Out of an abundance of caution, we decided to temporarily suspend MAX flights," Boeing said. "The step is consistent with our priority focus on safety for all who use and fly our products."

GE Aviation and Safran confirmed in a statement that CFM notified Boeing of the engine issue. "We discovered the issue as part of our quality inspection process and notified Boeing immediately," the statement said.

Boeing said the 737 Max 8 flight test program has put in more than 2,000 hours on the aircraft's engines. It also said the company still plans to begin first deliveries of the Max in May.

The 737 Max 8 is the first of three planned models of Boeing's 737 Max line. The others include the Max 9, with just two test airplanes built so far, and the Max 7, a version that has yet to start production.