Boeing faced another significant setback as its shares plummeted by nearly eight percent, casting a shadow on the Dow, following a recent mid-air safety incident that has triggered heightened federal scrutiny.
The incident involved a Boeing 737 MAX operated by Alaska Airlines, which executed an emergency landing after a “door plug” panel blew out during flight. Fortunately, there were no fatalities or serious injuries reported.
According to AFP, the Federal Aviation Administration (FAA) initiated a safety probe into the January 5 incident, marking the first major in-flight safety issue on a Boeing plane since the fatal 2018 and 2019 737 MAX crashes that led to a nearly two-year grounding of the aircraft.
In response to the recent incident, US regulators grounded 171 Boeing 737 MAX 9 planes with a similar configuration as the one involved.
This move sparked concerns among investors, causing Boeing shares to experience a sharp decline. Wells Fargo, in an equity analyst report, highlighted the challenges Boeing faces, stating that the FAA audit “opens a whole new can of worms.” The report also noted that Boeing’s recent track record and the FAA’s heightened scrutiny make the odds of a clean audit appear low.
Wells Fargo further downgraded Boeing shares, citing the anticipation of slower deliveries of the 737 MAX in 2024. The report estimated that this would result in a reduction of $2 billion (RM9.4 billion) in free cash flow compared to previous analyses.
Amidst these challenges, United Airlines has extended the cancellation of services on Boeing 737 MAX 9 jets through January 17.
Meanwhile, Boeing has named retired Navy admiral Kirkland Donald as an advisor to Chief Executive David Calhoun, tasking him with conducting a comprehensive review of Boeing’s quality programs and practices.
