Actions of boeing fell 8% on Monday as investors digested news that the Federal Aviation Administration had ordered airlines to ground dozens of Boeing 737 Max 9 planes for urgent inspections.
The FAA issued the order Saturday after a door plug exploded in the middle of a Alaska Airlines flight on Friday when the almost new plane was flying at about 16,000 feet.
Boeing shares recovered some of their losses by mid-morning after the planemaker issued 737 Max 9 inspection instructions to airlines, a key step toward resuming flights. Shares last fell about 6%.
Alaska Air shares closed flat. AeroSystems Spiritwhich makes fuselages for the 737 Max, fell 11%.
The incident puts Boeing back in the spotlight. Chief Executive Dave Calhoun has been trying to assure investors that Boeing is getting back on a better footing after a series of problems, including two crashes that killed 346 people, pandemic supply chain havoc and a series of defects. quality.
An Alaska Airlines Boeing 737 Max-9 aircraft landed at Seattle-Tacoma International Airport (SEA) in Seattle, Washington, USA, on Saturday, January 6, 2024.
David Ryder | Bloomberg | fake images
Large-scale groundings by aviation authorities are rare, but the FAA has been examining Boeing and its best-selling 737 Max since the fatal crashes in 2018 and 2019. Boeing said it agrees with the FAA’s decision to ground Max 9 planes for inspections. He was working on drafting instructions with federal regulators for airlines to begin inspections.
Friday’s accident occurred just as Boeing was trying to ramp up production of the Max.
“A leak of this nature makes one question the quality control of the 737 delivery ramp and the impact of inexperienced labor on both Boeing and its supply chain,” wrote Bank of America aerospace analyst, Ron Epstein, in an analyst note on Monday, adding that the plane was delivered just a few months earlier. “This plane still had a ‘new plane’ smell and the sticker price on its window.”
The FAA said Saturday that about 171 aircraft would be affected by its emergency airworthiness directive, which applies to U.S. airlines and carriers operating on U.S. soil. Alaska Airlines and united airlines They are the largest operators of the 737 Max 9 model, with more than 200 flying around the world, according to Cirium.
United Airlines has the most with 79 and Alaska has 65, while the rest are distributed among other airlines.
United shares rose more than 2% on Monday.
“Considerable pressure”
The National Transportation Safety Board over the weekend described harrowing minutes aboard the Alaska Airlines flight, which began with a loud bang and force so violent that it tore headrests and seat backs off and ripped open the door. of the cabin.
A school teacher found the plane’s panel burst in his backyard, the NTSB said Sunday night.
Images shared on social media showed a hole in the side of the plane and passengers wearing oxygen masks. The flight, Alaska Airlines Flight 1282, returned to Portland, Oregon, shortly after departing for Ontario, California.
Russ Mold, chief investment officer at AJ Bell, said Friday’s incident is the latest in a “series of problems for the company” and suggested that airlines using 737 Max aircraft will “think carefully about their future aircraft needs.”
Shares of Boeing’s European rival Airbus it gained 2.5% in Paris as investors speculated it could take market share from the American powerhouse.
“Naturally, questions arise about quality controls and whether Boeing is trying to do too much too quickly,” Mold said.
“Boeing management will come under considerable pressure from regulators and customers to explain what is happening, which means considerable headwinds for the business. It is no surprise that investors have rushed to sell the shares, as the risks to the investment case have just skyrocketed.”
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Correction: This story has been updated to correct that there are more than 200 737 Max 9s in service, including 79 operated by United Airlines and 65 operated by Alaska Airlines.
