Boeing could see more losses: experts
Boeing Co. may have to book billions of dollars in additional charges related to its grounded 737 Max jets, brokerages said on Monday, following reports that call into question the timing of the aircraft’s return to service.
Credit Suisse and UBS downgraded the stock after reports on Friday showed internal messages between two Boeing employees stating that the plane’s anti-stall system behaved erratically during testing before the aircraft entered service. The new revelations pose fresh challenges for Boeing, which is reeling under pressure after two fatal crashes forced the company to ground the planes and book billions of dollars in losses.
The crisis over the messages continued to consume the U.S. manufacturer on Monday, with CEO Dennis Muilenburg telling all staff by email they should speak to managers if they have questions about the messages. He began the email by saying Boeing continues to make “steady progress” toward lifting the 737 Max worldwide safety ban.
Boeing’s shares fell as much as 5.7 per cent in early trading on Monday, making the stock the biggest percentage loser on the Dow
Jones Industrial Average; they ended the day down 3.8 per cent at US$331.06. They have lost 18 per cent of their value since the second deadly crash of the jet in March.
The plane maker has already cut production of the Max, and analysts said there was an increasing possibility that the company would have to halt production altogether.
“We see increasing risk that the Federal Aviation Administration won’t follow through with a certification flight in November and lift the emergency grounding order in December,” UBS analyst Myles Walton said, downgrading the stock to “neutral” from “buy.”
He cut his target price on Boeing’s shares by US$95 to US$375.
Boeing on Sunday expressed regret over the messages. It said it was still investigating what they meant.
It could record US$3.2 billion in charges over four months on top of a US$5.6-billion charge taken so far, Credit Suisse analyst Robert Spingarn said.
Reuters
With a file from Bloomberg