• Mon. May 27th, 2024

Boeing’s Stock Drops as Investors Assess the Alaska Airlines 737 Fallout


Jan 8, 2024
Boeing’s Stock Drops as Investors Assess the Alaska Airlines 737 Fallout


Boeing’s share price fell sharply on Monday, in the first trading session after part of the fuselage of one of its 737 Max 9 jets blew out on an Alaska Airlines flight on Friday night.

Boeing’s stock slipped nearly 7 percent and Spirit AeroSystems, which made the door plug that was torn from the plane, fell about 8 percent, recovering from a far steeper decline in early trading.

The Alaska Airlines flight departing from Portland, Ore., lost the mid-cabin door plug midair, exposing passengers to howling winds and forcing an emergency landing. None of the 171 passengers and six crew members aboard were seriously injured.

The Federal Aviation Administration on Saturday ordered U.S. airlines to ground all their Boeing 737 Max 9 planes. The National Transportation Safety Board is investigating the incident.

United Airlines and Alaska Airlines, the heaviest users of the Max 9, canceled more than 350 flights on Monday, representing 8 percent of United’s schedule and 20 percent of Alaska’s, according to FlightAware. United’s stock rose 1.7 percent on Monday, while Alaska’s fell 2.5 percent.

Other airlines with Max 9 planes in their fleets are outside the United States, such as Copa Airlines of Panama, Turkish Airlines and Icelandair. Those planes may not be subject to the same regulatory action. The European Union’s aviation safety agency announced on Monday that the Max 9 jets operating in Europe were not grounded because they had a different configuration than the Alaska Airline jet that was forced to make an emergency landing.

Boeing said early Monday morning that it had issued instructions for how airlines should conduct inspections of the plane.

Spirit AeroSystems said in a statement on Monday that it is “a committed partner with Boeing on the 737 program, and we continue to work together with them on this matter.”

Another version of the Max, a 737 Max 8, was involved in two crashes that killed hundreds of people in 2018 and 2019, which led to its worldwide grounding. And last month, Boeing urged airlines to inspect the more than 1,300 delivered Max planes for a possible loose bolt in the rudder-control system.

While investors were spooked, few analysts expected the financial damage to Boeing and others to persist, based on what they had seen from regulators and the companies after the Alaska Airlines incident.

Analysts at Barclays noted that the jets’ grounding would have only a “small financial impact” because the Max 9 fleet was relatively modest, at 215 planes, with 144 operating in the United States.

The Max 9 only accounts for 2 percent of Boeing’s order backlog, the analysts noted. Alaska has 27 of the Max 9 jets on order, and United has seven.

Analysts at Williams Blair said the slide in Boeing’s stock was a buying opportunity. “While the Alaska Airlines door plug accident was terrifying,” they wrote, “we do not believe that it will have a major financial impact, unless another incident occurs after the aircraft returns to service.”

A research report by Morningstar agreed that the impact would not be “material,” but noted that “the dramatic nature of the flaw will have the effect of once again calling Boeing’s product governance into question by customers, regulators and the flying public.”

Mark Walker contributed reporting.


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