Fearful flyers lose faith in Boeing 737 Max after two fatal incidents in just five months

Passenger confidence in Boeing Co.’s 737 Max has taken a hit after the jet’s second fatal crash in just five months.

Travelers around the world took to social media to express fears about the plane’s safety—or seek reassurance from carriers that fly it. Hours earlier, an Ethiopian Airlines 737 Max crashed after leaving Addis Ababa, killing all 157 people on board. Some flyers said they were now too fearful to board one of those planes.

One customer at Southwest Airlines, which has more 737 Max jets on order than any other carrier, changed flights to another aircraft after discovering the plane was a 737 Max. Another asked if Air

Canada was doing extra checks on its Max fleet.

Safety concern

THE disaster followed the plunge of a Lion Air 737 Max into the Java Sea off the coast of Indonesia on October 29. A preliminary report into that crash, which killed 189 passengers and crew, indicated pilots struggled to maintain control following an equipment malfunction.

Connecting the two incidents, social-media users expressed concerns to carriers that operate or have ordered the Max, from Ryanair and Garuda to Fiji Airways and Norwegian Air. Already in China, authorities grounded the country’s entire fleet of 737 Max 8 planes, while Cayman Airways, the flag carrier of the Cayman Islands, suspended operations of both its Max 8 aircraft.

Any widespread veto by flyers would put extra pressure on Boeing.

In response, Southwest and Iceland Air were among the airlines to back their choice of aircraft. Boeing has said it’s preparing to send a technical team to assist the accident investigation of the Ethiopian Airlines plane, which was delivered new in November.

Iceland Air said the 737 Max carries out around 1,000 trips a day worldwide. The airline has three of the aircraft and has never had an incident, it said.

Meanwhile, the Ethiopian Airlines crash is bringing out equity bears.

Futures contracts on the Dow Jones Industrial Average Index— where Boeing has the largest weighting—fell on Monday during Asian hours, sliding as much as 0.6 percent after Flight ET302 plunged to the ground minutes after leaving Addis Ababa en route to Nairobi, Kenya, killing all 157 people on board. This is Boeing’s second 737 Max crash in five months. To make matters worse, China asked domestic airlines to temporarily ground those jets by 6 p.m. local time, and Ethiopian Airlines said it would ground them until further notice.

Boeing shares could slide in US trading as concerns are increasing over the jet, said Eleanor Creagh, a Sydney-based market strategist at Saxo Capital Markets. Even a 5 percent fall would cut more than 100 points from the Dow, she estimated. When a Lion Air plane of the same model sank into the Java Sea off the coast of Indonesia last year, killing 189 passengers and crew, the shares lost almost 7 percent.

“Weakness transpiring in Boeing’s share price will hit the Dow,” Creagh said by phone. The stock has been responsible for about a third of the gains as markets recovered since the December low, she said.

Shares of the US manufacturer have gained 31 percent this year, the most among Dow components and adding more than $55 billion in market cap. While that’s partly due to the improving sentiment over the US-China trade talks, the company also reported a record cash pile for 2018 with sales reaching $100 billion for the first time in its 102 years.

The weekend accident happened as the US stock-market rebound is showing signs of strain. The S&P 500 Index just posted its biggest weekly loss of the year as concerns surrounding global economic growth mounted. Risk appetite has weakened and the bar for positive surprises is now higher after a more than $9 trillion global equity rally since a December low. The Dow, where Boeing has an 11 percent weighting, dropped 2.2 percent last week.

In a March 11 report, Morgan Stanley said it expects a “degree of weakness and volatility” in the shares until there is clarity on what happened with this crash, adding it is premature to make any linkage to the Lion Air accident. Analyst Rajeev Lalwani wrote last month that the company’s stock has a “clear path” to $500 given broadly higher market multiples along with a potential order boost from a resolution in the China trade situation. Bloomberg News