Boeing Co. (BA.N) fell again as investors absorbed the threats stalking the 737 Max, and the aerospace giant withdrew from a potentially lucrative competition to supply nuclear missiles amid a dispute over U.S. Air Force bidding rules.

The biggest Max operator, Southwest Airlines Co., on Thursday became the first U.S. carrier to eliminate the grounded plane from its schedule until early 2020. That added to a “hangover’’ among Boeing investors a day after the company said it would consider pausing 737 production if the flying ban drags on, said Bloomberg Intelligence analyst George Ferguson.

“Talking about an interruption in production for Max scares investors,’’ Ferguson said in an email. “It takes a little while for the buy side to react.’’

The U.S. planemaker is trying to reset expectations on Wall Street and with employees as the Max crisis deepens. The ICBM controversy raises a new question, as Boeing’s pushback against the Air Force on one of the largest weapons contracts of the next decade shows the challenges ahead for the company’s defense unit.

The shares tumbled 4 per centto US$346.88 at 1:52 p.m. in New York, the biggest decline on the 30-member Dow Jones Industrial Average, and the fourth straight drop. Boeing is on track for its worst weekly slide since an Ethiopian Airlines 737 Max 8 crashed in March, prompting the worldwide grounding.

Employee Meeting

While the manufacturer has estimated that regulators will start approving the Max to return to service early in the fourth quarter, Chief Executive Officer Dennis Muilenburg cautioned investors Wednesday that he couldn’t offer any certainty.

Muilenburg also spelled out the alternatives Boeing is mulling if the flying ban grinds on too much longer. They include slowing or even halting work at a factory in Renton, Washington, where the single-aisle jets are manufactured.

Boeing scheduled a rare all-hands webcast for Thursday to discuss the latest developments for the Max, the company’s best-selling jetliner. While the Chicago-based planemaker typically doesn’t discuss internal meetings, a spokesman said the session was intended to relay the earnings discussion to workers, rather than to make further announcements.

Southwest Airlines said that even if regulators lift a global ban, it will still need time to train pilots and pull jets out of storage. The carrier also wants to avoid any disruptions during the busy year-end travel season, CEO Gary Kelly said in an interview.

Airline Limits

While Southwest hasn’t yet discussed the latest Max production scenarios with Boeing, Kelly said there were limits to how many planes the airline could take in a given time period. Boeing has been stashing Max jets around the West Coast and in Texas, including on its employee parking lots.

“We can only ingest so many airplanes a day or a week, whether it’s our airplane, a new Boeing delivery or an airplane Boeing has parked somewhere. There is physical effort involved, FAA effort involved,” Kelly said in an interview. “It doesn’t make any sense to have hundreds of airplanes sitting around waiting to be delivered. We’ll talk to them about that.”

That said, Southwest is eager to get its planes from Boeing “as fast as is practical,” Kelly said. “We think that around midyear next year we could more or less get back in line with our original delivery schedule.”

Boeing Costs

Ron Epstein, analyst with Bank of America Merrill Lynch, predicts it could cost Boeing US$13.7 billion in all through 2023 to placate customers and restore the Max to service. That’s about US$5.3 billion higher than the costs the company has recognized, and includes US$3 billion in additional customer concessions and penalties.

Boeing cash flow is likely to gush next year as 737 deliveries pick up steam, but analysts and investors are resetting their estimates for Boeing’s free cash flow generation years into the future in light of the production issues, said Ken Herbert, analyst with Canaccord Genuity.

“While we do not believe the risk to further downside on the Max has changed, the different tone from management is noteworthy,” he said in a report.

Missile Contract

For investors already rattled by the Max crisis, the Air Force contract issue emerged as another watch item. The Pentagon projected the cost of the program at US$85 billion in 2016, and Bloomberg Intelligence analyst Doug Rothacker put the potential price tag at almost US$100 billion in a report Thursday.

Boeing decided to withdraw from the contest for a new ground-based missile defense because the final request for proposals issued July 16 didn’t address issues of “fairness and integrity” it had raised earlier, Leanne Caret, CEO of Boeing’s defense unit, wrote in a letter the U.S. Air Force’s head of acquisition this week.

The spat centers on Boeing’s access to technical and pricing information for solid-rocket motors made by Orbital ATK since the company was acquired by Northrop Grumman Corp., the rival bidder for the missile contract.

“We believe this could force the Air Force to reconsider the acquisition strategy, will raise concerns in Congress, and potentially lead to FTC inquiries about Northrop’s adherence to the OA merger consent agreement,” Cowen & Co. analysts Roman Schweizer and Cai Von Rumohr said in a report, referring to Orbital by its former stock ticker.