Categories Consumer, Industrials

Boeing stock goes into a tailspin amid grounding of planes after deadly crash

Fresh questions are being raised about Boeing’s (BA) safety records after Sunday’s plane crash in Ethiopia, the second deadly accident involving the 737 Max 8 in five months. While carriers across the globe have raised concerns about the reliability of the aircraft, China went one step further by grounding all of the 737 MAX 8 planes operated by the local carriers.

The crisis set off a stock selloff that added to the downfall of Boeing shares that began earlier this month, after reaching a peak. The stock lost around 13% in the pre-market trading Monday, paring some of the gains made since December last year when it slipped to a two-year low. The shares have gained about 15% in the past 12 months.

The reaction by the Chinese aviation firms, which followed an alert by the country’s regulators, has left more than 25% of all 737 MAX 8 aircraft grounded temporarily. Earlier, a 737 MAX 8 operated by Indonesian aviation company Lion Air had crashed last year leaving everyone on board dead. Considering the similarities between the two mishaps, the aircraft model that was launched two years ago with much fanfare might be subjected to stringent safety tests before operations are resumed.

The crisis set off a stock selloff that added to the downfall of Boeing shares that began earlier this month, after reaching a peak

According to the Civil Aviation Administration of China, services will be reinstated only after receiving an assurance from the US Federal Aviation Administration and Boeing with regard to the safety of the aircraft, after the ongoing investigation. While the exact cause of the accident is yet to be ascertained, Ethiopian Airlines grounded its 737 MAX 8 fleet as a safety precaution.

Also read: Boeing stock sinks after plane crash in Indonesia

For Boeing, the situation is worsening as more airlines are withdrawing from service the doomed passenger jet, which is the company’s best-selling model so far. In their initial response, Boeing officials ruled out issuing any fresh guidance to the airlines flying 737 MAX 8 planes, based on the information currently available, as the investigation into the crash is in the early stages.

All the 157 persons on board the Ethiopian Airlines plane, en route to Nairobi, died after it crashed soon after taking off from the Addis Ababa airport Sunday – an incident  reminiscent of the Lion Air crash in October last year.

Meanwhile, the shares of Boeing’s rival Airbus were up 1% in the Euronext Paris stock exchange during Monday’s regular session.


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