Boeing shares slump after hole blown out of plane mid-flight
Aerospace giant suffers as 737 Max 9s grounded and missing door plug found in Oregon teacher’s garden
BOEING shares tumbled yesterday as airlines grounded 737 Max 9 planes following a mid-flight blowout.
The company’s stock fell as much as 9pc in New York, as investigations into the incident three days earlier continued. In London, shares in aerospace parts manufacturer Senior, which works closely with Boeing, dropped more than 2pc.
A door was torn off the side of an Alaska Airlines 737 in a blow-out that depressurised the aircraft and forced the flight to turn back and land.
Officials discovered the plug door that was torn off behind a teacher’s house in Portland, Oregon, yesterday.
In the wake of the incident, the US Federal Aviation Administration has ordered airlines to temporarily ground all 171 of the 737 Max 9s currently operating in America pending inspection.
Analysts did not expect the incident to lead to serious problems for Boeing but they were watching the reactions of regulators including those in China, where deliveries of the 737 Max planes have been paused since 2019. Nicolas Owens, an analyst at Morningstar, predicted no “material financial impact” but added: “The dramatic nature of the flaw will have the effect of once again calling Boeing’s product governance into question by customers, regulators, and the flying public.”
Analysts at JP Morgan said: “Perhaps the most consequential foreign regulator now is China, where the government has not yet allowed carriers to resume 737 Max deliveries. Boeing has seemed on the cusp on resuming deliveries to China for some time, with positive signals in recent months. Friday’s accident could delay this process.”
Boeing said it is supporting the regulatory investigation and has stressed “safety is our top priority”.
The company has a video conference for all employees today to discuss how it is responding, hosted by president and chief executive Dave Calhoun.
Mr Calhoun said: “While we’ve made progress in strengthening our safety management and quality control systems and processes in the last few years, situations like this are a reminder that we must remain focused.”
The incident is a fresh blow to Boeing’s 737 Max jets, the fourth generation of the its best-selling narrow-body plane that has a troubled history.
An earlier model of the Max was grounded worldwide, after two crashes in 2018 and 2019 killed 346 people in Indonesia and Ethiopia.
Flying can be a desperately stifling affair: hundreds of people crammed into a giant tin can with wings; everyone breathing their germs on each other while the stale aroma from all that dodgy processed plane food wafts around the cabin.
Still, passengers on an Alaska Airlines flight over the weekend are entitled to ask whether Boeing is taking its commitment to ventilation too literally after they were confronted by a gaping hole in the side of the plane shortly after take-off. With two empty seats being sucked out over the night sky, it is a miracle that the company doesn’t have another fatal incident on its hands.
Yet whatever sliver remained of Boeing’s reputation almost certainly vanished through the same dark void described as “the size of a refrigerator” in reports. This latest incident is another potentially devastating setback for a company still reeling from the worldwide grounding of its 737 Max planes following two crashes in Ethiopia and Indonesia that killed a total of 346 people.
Early indications are that it was an isolated incident – but this is Boeing, after all, so regulators cannot afford to take any chances. It is reassuring that America’s National Transportation Safety Board sprung into action; so too that Alaska Airlines was quick to ground its entire fleet of 737 Max 9 jets for immediate inspection. Nevertheless, it will be of huge concern that Friday’s accident involved a model from the 737 Max series, an airliner that surely has the most troubling track record of any modern jetliner currently crisscrossing the skies. Boeing’s bestselling design has been beset by multiple deadly crashes and numerous other serious flaws.
There are more than 200 of the Max 9 alone in service around the world, and it can be found among the fleets of many major airlines, according to aviation analytics company Cirium. United Airlines has 79 Max 9s in service, while Alaska Airlines has 65 and plans for another 15 of the aircraft.
The weekend’s events are a public relations catastrophe for Alaska, coming just a week after the release of an effusive press release in which the airline pledged its commitment to the Boeing line-up and enthused about the “terrific results” it had experienced with the 737-9 in “guest satisfaction”, among other things. It is an account that is surely at odds with those that had to huddle together for warmth on the weekend’s doomed flight from Portland, Oregon – particularly the passenger who arrived topless after his shirt was sucked out of the side of the plane where the door once was.
United and Alaska account for roughly two thirds of the 737-9’s in existence. Panama’s Copa Airlines, Aeromexico, Iceland Air, Flydubai, and Kazakhstan’s Scat Airlines also operate the jet.
An entry on the website of Turkish Airlines, which flies several of the planes, boasts that it “takes the flight experience to the next level” because of features such as a “body made of durable composite materials” and “an interior design that prioritises passenger comfort”.
Of particular concern to regulators will be that the plane involved in Friday’s incident was fresh out of the factory, not some battered old model that had chalked up one too many night flights to the other side of the world and back. It was first registered in November and had logged only 145 flights, according to reports. Does this point to a serious design flaw, lax oversight and controls on the factory floor, or corporate complacency? The prospect of any of those shortcomings at a company with Boeing’s history is deeply worrying.
Perhaps what is most alarming is that this latest mishap has come despite the extreme lengths that Boeing has been forced to go to to overhaul its operations, mend the company’s reputation, and restore faith in its planes.
It suggests the company has failed to get a grip on the production issues that led to the grounding of the 737 for 20 months despite the latest assurances from chief executive Dave Calhoun. In a message to employees Calhoun said Boeing would hold a company-wide, live-streamed meeting today to discuss its response to the accident, while reiterating its commitment to “safety, quality, integrity and transparency”.
But then this is an organisation whose initial response to the catastrophic crashes in Indonesia and Ethiopia was a mixture of hubris, contempt, and blame-shifiting even as it emerged that it had withheld critical documentation from investigators that showed pilots had expressed serious concerns about the safety of the 737 Max.
A 250-page congressional report later found “cost-cutting … that jeopardised the safety of the flying public”; a “culture of concealment” of problems with the aircraft; and “troubling mismanagement misjudgements” among the failings behind the two fatal accidents.
Not only are there all sorts of fresh questions about what is going on at Boeing operations, it is also a significant blow to American manufacturing prestige at a time when Joe Biden has sought to put rocket boosters under the country’s industrial base with vast incentives from federal government for fresh investment programmes and the building of new factories.
Safety is everything in the airline sector. If Boeing cannot guarantee the security of its planes, then there must be fresh doubts about its suitability as one of the world’s largest suppliers of passenger jets.
It is surely only the gilded global duopoly that it shares with Airbus that is stopping one of the biggest names in American industry from being permanently grounded.