Boeing shares plummet as 737 MAX incident raises safety concerns, threatens company's recovery

Shares of Boeing experienced a sharp decline on Monday following a terrifying mid-flight incident involving an Alaska Airlines flight, intensifying safety worries just as Boeing aimed to restore its tarnished reputation.

The Dow index slipped into negative territory as Boeing stocks plummeted by more than eight percent, triggered by the alarming event on Alaska Flight 1282.

Departing from Portland International Airport, the aircraft faced a pressurization issue mid-flight, prompting a quick return to Portland and revealing a harrowing scene of a gaping hole in the plane’s side.

Video footage of the incident, showcasing air rushing through the cabin, dangling oxygen masks, and passengers glimpsing city lights through the exposed opening, circulated globally.

Miraculously, there were no major injuries reported, leading regulatory bodies to swiftly ground certain versions of Boeing’s 737 MAX 9 jet pending inspections.

National Transportation Safety Board (NTSB) Chair Jennifer Homendy highlighted the fortunate outcome, revealing that a backyard discovery of the door plug by a local resident prevented a potential tragedy. The door plug, a cover panel for an unnecessary emergency exit, had somehow detached during the flight.

Despite the absence of clear details on what went wrong, Boeing shares took a hit early Monday, affecting its supplier Spirit AeroSystems and Alaska Airlines. By 1515 GMT, Boeing was down 8.1 percent, Spirit dropped 12.5 percent, and Alaska lost 3.8 percent.

The incident adds to a series of setbacks for Boeing, notably involving the 737 MAX.

Previous crashes in 2018 and 2019 led to a worldwide grounding of all 737 MAX planes for nearly two years. In the aftermath of the Alaska Airlines incident, the FAA announced the grounding of approximately 171 Boeing 737 MAX 9 planes for inspections, each taking four to eight hours.

Major carriers, including Alaska and United Airlines, have grounded their MAX 9 planes for inspection, echoing global counterparts. Boeing CEO Dave Calhoun has called for an all-employee safety meeting on Tuesday at the company’s factory in Washington state.

Amidst speculation of a quality control problem, aviation analysts suggest the issue may be related to the manufacturing of the door plug or securing bolts. Scott Hamilton of aviation news outlet Leeham News considers it a potential isolated incident rather than a systemic problem.

Nevertheless, the incident could pose a setback to Boeing’s plan to increase production on the MAX, crucial for the company’s financial recovery.

With losses reported for the past four years, Boeing’s ambition to ramp up production to 38 MAX planes per month and eventually reach 60 per month may face delays contingent on reinforcing the supply chain.