Boeing Planes Grounded – Stock Could be Under Pressure

March 14, 2019
1008 Views

Boeing Co. (NYSE: BA) stock has the potential to end lower this Thursday. President Trump and the FAA announced on Wednesday afternoon that all Boeing 737 Max aircraft will be grounded in the U.S., until further notice.

This affects both 737 Max 8 and Max 9 models in operation.

The FAA Lags Behind in Grounding Boeing Jets

Trump made the announcement ahead of the FAA, telling reporters at the White House that “all of those [Boeing 737 Max] planes are grounded effective immediately.” The President also told reporters that “Pilots have been notified and airlines have all been notified. Airlines are agreeing with us. The safety of the American people and all people is our paramount concern.”

The United States is the last major nation to ground the planes. The United Kingdom, France, Germany, the European Union, China, and Canada had all grounded the planes this week, declaring them too dangerous to fly.

The grounding follows two 737 Max crashes in less than five months. The most recent crash occurred on March 10, when an Ethiopian Airlines jet crashed just six minutes into a flight. 157 were killed in the crash, including 8 Americans. The plane was four months old.

French Authorities Will Investigate Crash

Since the crash, Boeing has doubled down on its insistence that the planes are safe to fly, however, European regulators have been skeptical, grounding planes across the continent.

Black box flight recorders from the Ethiopian Airlines crash arrived in Paris on Thursday for analysis.

The FAA said on Wednesday that it had received “refined satellite data” which showed similarities between the recent crash and an earlier crash of a Lion Air 737 Max. Investigators now suspect that there could be something fundamentally wrong with Boeing’s flight systems.

Boeing released a statement on Wednesday, saying that it “continues to have full confidence in the safety of the 737 Max.” However, the company agreed to ground the planes “out of an abundance of caution.”

Investors Should Brace for a Stock Slide

Investors in Boeing lost $26.6 billion in the opening two days of trading this week. Shares slid 11% between Friday and Tuesday. Thursday could come with the full impact of concerned investors.

Boeing has been a frequently recommended stock in 2019, thanks in part to the impressive sales performance of the 737 Max. Depending on the outcome of the international investigation into recent crashes, Boeing stock could receive a downgrade from top analysts this year.

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