Spoilers for Alien: Covenant.
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For all its R-rated horror, Alien: Covenant is really about answering big questions - from the peak of modern existentialism, to the fundamentals of the Alien franchise. These two focuses are married beautifully with Ridley Scott finally revealing how the xenomorph was created, although within that he creates a pretty major franchise plot hole.
This isn't new in the prequel enterprise. Prometheus was criticized upon release for a variety of plot holes and illogical elements, although in that instance most of the problems (dumb characters for one) were isolated to the individual movie - it was simply too far removed from the 1979 classic to have a direct crossover with the original Alien.
Covenant is explicitly bridging the two films, so while that means Scott can clear up some weird threads from Prometheus, it also brings everything closer to LV-426 and that fateful, chestbursting dinner. And it's here that we have a problem.
The LV-426 Derelict Plot Hole
In the original Alien, trucking spaceship the Nostromo intercepts a distress call from nearby planet LV-426 and the crew go to investigate. There they come across a crashed spaceship, known colloquially as "the derelict", where they find two things of major importance. First is the Space Jockey, a giant, trunked, humanoid pilot seemingly killed by a xenomorph bursting from his chest, who has been left on the planet long enough to become fossilized and begun to grow out of his command module. The second is the ship's hold, which contains thousands of facehugger eggs.
After John Hurt gets attacked by one of those creatures, the movie enters full slasher territory and the origin of the Pilot and his craft isn't discussed again (in either the original movie or its sequels). What the film suggests, though, is pretty oblique: millennia ago an elephantine alien was attacked by his own cargo, presumed to be a biological weapon.
Prometheus already made some big alterations to this idea. In the first prequel, we learned that the "Space Jockey" exterior was actually a spacesuit for the Engineers, humanity's towering creators. While that's certainly different to what fans knew for three decades, here's where Prometheus' distance came in. Because that film was on LV-223, a different planet, it was easy to chalk up everything the crew went through as a cautionary tale; what led to the derelict and space jockey was similar to what happened to Shaw and co., but occurred apart from them in location and time. The obvious suggestion was that the LV-426 ship had crashed hundreds if not thousands of years ago (perhaps even linked to the Engineer decision to destroy Earth 2000 years ago), and with his new films Scott was explaining it by proxy; it happened in the past and now we're seeing something similar happen again.
Enter Covenant. It's an altogether better film than Prometheus, on both a horror and ideological level, and does a lot of legwork to retroactively improve its predecessor; however, within that it creates a major clash. In the new film we learn the explicit origin of the xenomorph: everything - the egg, the facehugger and the chestburster itself - is the product of android David's genetic meddling on the Engineer homeworld.
It's a thematically weighty reveal that goes even deeper into the series' already heavy creation exploration. But let's get literal for a second: if the eggs were first made in the eleven-year gap between Prometheus (2093) and Covenant (2104), then how are they also on the derelict and able to kill the space jockey from over 1000 years prior? In going so explicitly into the backstory, Scott has directly contradicted himself and created a plot hole at the core of his series. And the explanations get tricky.
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Is Ridley Scott Retconning Alien?
The big question we need answering is whether the eggs in the hold of the derelict in Alien are of the same genus as the ones that David's bioengineered in Covenant and smuggled off-world in his esophagus. It definitely feels like the new movie is leading us towards that, so, assuming they are, the logical conclusion is that Ridley Scott is retconning Alien.
He's already done this to some degree with the space jockey becoming a spacesuit - a change that provides a degree of leeway for the hole. Dallas may have mistaken the suit for fossilized bone, altering the perceived timeline (although that doesn't excuse it "growing out of the chair"). However, comparing the Engineer spaceships of Prometheus and Covenant with the derelict of Alien shows further distancing. It's hard to grasp true scale, but for all the accuracy of design, there are some inconsistencies with how large the ship, the console, and the pilot are (it's much bigger in the original film). And that's nothing on texture - even if it's meant to be an exosuit, the space jockey doesn't look like the sheen-y versions of the costumed Engineers we've seen in the prequels. The same is also true of how the protomorph in Covenant is a more organic version of Giger's xenomorph in the original film. All these subtle things point towards the derelict scene being only loosely used for inspiration and the prequels inhabiting a "tangential canon."
Sounds bizarre, but there's no reason to think otherwise. While we're accustomed to film franchises being tightly wound, such extreme continuity is often a hindrance, especially when we're dealing with movies made four decades apart. In some cases it can help - one of Rogue One's biggest strengths was its faithful recreation of the 1977 Star Wars and using that to inform tone - but in others, it just doesn't fit the modern vision. This is likely especially true of Scott who has been the architect of the progenitor and new movies; what he wants in his 70s will inevitably be different to what he created in his 40s.
That still leaves many more questions - not least of which is who exactly is the unlucky space jockey - but with more movies still to come before he goes "back into the rear back head of Alien", Scott may still have an answer for us, even if it's not totally free of inconsistencies.
Or Is It Still All About Pre-Determinism?
I we want to take everything on screen as sacrosanct, then we may want to break from the David's eggs theory and go back to the suggestion from Prometheus that everything we're seeing with David is an echo of an event that's already happened. Although the Fass-bot has made xenomorph eggs et al, he may not be the only being to have tried to create a pure-breed alien from the black goo pathogen. Indeed, as the "perfect organism" is a result of cross-breeding there's an element of the xenomorph that was inherent in the black spores on the Engineer planet, meaning anybody so deviously inclined could, with enough incubation time, develop them. This makes it possible for the derelict to have crashed on LV-426 millennia before the movies and David have "invented" the creature independently.
This certainly heightens the sense of pre-determinism that is already underlining the prequels with the dependable cycles of species falling at the hands of their scientific meddling - a xenomorph is a terrifying inevitability - although it does pose some strange narrative concerns. Prometheus, Covenant and whatever comes next are definitely positioning themselves as explainer movies, so it feels rather reductive to have it all be a comparison teaser. Then again, Scott has brought in massive literary influences to his sci-fi/horror, so something grandiose and metaphorical isn't out of the question.
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For all its inherent intrigue, the specifics of the derelict spacecraft were never focused on too heavily the original Alien or what came in the decades since. This is why Scott's gone the prequel route in the first place, but also gives him a bit more freedom to meddle with established elements - he's contradicting much less content. As such, while David creating the xenomorphs when the ship and its payload was already presumably on LV-426 is a spectacular logic gap, it - like making the space jockey a spacesuit - ultimately fits within the director's greater plans for the series.
From a basic continuity level, then, this may be a quote-unquote plot hole, but in this case appears to one done with at least a sense of awareness and the hope that the audience will squint it past... Just as long as the alt-explanation is a good one.