Boeing shares tumble following fatal crash in China
BOEING shares dove early on March 21 following the fatal crash of one of its jets in China, where the US aviation giant was poised to soon resume deliveries of the 737 MAX.
The crash involved a Boeing 737-800 – a different model from the MAX – operated by China Eastern and carrying 123 passengers and nine crew members, according to Chinese aviation authorities.
Shares of Boeing fell 5.6 per cent to $182.06 in mid-morning trading, making it the biggest loser in the benchmark Dow Jones Industrial Average.
The disaster prompted an unusually swift public reaction from President Xi Jinping, who said he was “shocked” and ordered an immediate investigation into its cause.
The drop in shares likely reflects worries the delivery timeframe for the MAX will slip as Chinese authorities investigate the crash.
Boeing’s airline deliveries are closely tied to the company’s revenue profile. A delay in Chinese deliveries could also potentially affect Boeing’s plans to ramp up manufacturing of the MAX.
Boeing did not directly address questions from AFP on how the crash could affect MAX deliveries.
“We are aware of the initial media reports and are working to gather more information,” a Boeing spokesman said.
China in December became the last major aviation authority to clear the MAX for service following a prolonged grounding that began in March 2019 after the second of two fatal crashes of the plane, which together claimed 346 lives.
In January, Boeing officials expressed confidence that MAX deliveries could resume in China in the first quarter, which ends in 10 days.
Boeing CEO David Calhoun said Chinese officials had undertaken a “perfectly predictable and methodical” approach to certifying the MAX.
“They’re taking test flights in a very methodical, intelligent way,” Calhoun said on a January 26 conference call with Wall Street analysts.
“I feel confident only because of every tea leaf I’ve been able to watch here, and they’re following through every commitment they’ve made,” Calhoun said.