Warren Buffett‘s Berkshire Hathaway Inc BRK BRK owns a plane parts manufacturer that could experience a significant financial setback due to Boeing Co BA’s recent incidents.
What Happened: Federal regulators have grounded 171 of Boeing’s 737 Max 9 aircraft after a door blew off during a recent flight. This grounding could have a knock-on effect on Precision Castparts PCP, a major manufacturer of industrial components owned by Berkshire Hathaway. Boeing is one of Precision’s largest clients, reported Business Insider on Tuesday.
Boeing has had a series of high-profile incidents in the past years, including delayed orders, production halts, and increased scrutiny of its aircraft. These issues have impacted Precision’s aerospace division, which faced production delays in Boeing’s 737 Max and 787 programs in 2019, 2020, and 2021.
Boeing’s most recent mishap could add further strain to its manufacturing operations, which would negatively impact Precision’s business, as the two companies have close ties.
Why It Matters: The recent incident involving the Boeing 737-800 is the latest in a series of mishaps that have plagued the aircraft manufacturer. This includes a door-plug failure incident on a recent Alaska Airlines flight and the continued grounding of 737 Max 9 jets. These incidents have led to a reputational minefield for Boeing, creating further challenges for its suppliers such as Precision Castparts.
Boeing’s CEO, David Calhoun, has acknowledged the mistake that led to the door-plug failure incident and promised complete transparency as investigations proceed. “We are gonna approach this—No. 1—acknowledging our mistake. We’re gonna approach it with 100% and complete transparency every step of the way,” Calhoun said.
However, the ongoing issues continue to impact Boeing’s operations and its relationship with key suppliers like Precision Castparts.
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