Boeing's Software Glitch Clouds Delivery Prospects

Boeing has identified a software glitch in its 737 MAX aircraft that can cause an automated navigation feature to fail during landing, according to the Wall Street Journal.

The issue was discovered by Boeing itself, which is significant as it shows the company's quality system is functioning properly. This stands out from previous issues with the 737 MAX, where regulators found problems.

The fault affects an automated navigation feature, not the flight control system that grounded the fleet in the past. This distinction matters greatly given the history of the 737 MAX.

Boeing's backlog is large and growing, with a recent order from Korean Air for 103 aircraft. However, the company's constraint has been converting its backlog into delivered aircraft, not getting new orders. A software fault like this one can consume engineering hours and regulatory attention, making it harder to lift delivery rates.

Boeing carries $48 billion of debt at high borrowing costs, which makes patience expensive for investors. They are paying for a recovery, not just today's profits.