Boeing Back In The Hot Seat After Mid-Air Panel Blowout; Shares Fall
Boeing shares fall 8 per cent in premarket trading after 737 Max 9 grounding
A mid-air cabin panel blowout incident on an Alaska Airlines Boeing 737 MAX-9 aircraft in the US has put Boeing in the exact spot investors and management hoped it would avoid, back in the regulatory crosshairs just as it was awaiting approval of new models of its best-selling MAX jet, reported by Reuters.
According to investigators, it is too early to determine what caused a door plug to fall off midair from the side of an aircraft operated by one of Boeing's most loyal customers, Alaska Airlines, on Friday with 171 passengers on board. The Federal Aviation Administration (FAA) on Sunday said that 171 Boeing MAX 9 airplanes would remain grounded until the agency is convinced they can safely operate.
According to news reports, Boeing shares fall 8 per cent in premarket trading after 737 Max 9 grounding.
The mishap comes as Boeing and supplier Spirit AeroSystems, which made the panel, are grappling with ongoing production setbacks that have hampered recovery from an earlier lengthy 737 MAX safety grounding and wider disruption from the pandemic, according to Reuters.
Boeing has been under pressure to expand the MAX portfolio and narrow a gap with rival Airbus, which has extended gains in market share since two Boeing MAX crashes in 2018 and 2019 that killed nearly 350 people and led to the MAX's worldwide grounding for 20 months.
The MAX's troubled history resulted in sweeping reforms of US airplane regulation in 2020, and the Alaska incident could prompt regulators to take a tougher line on other outstanding issues.
Boeing, which is saddled with $39 billion in debt, has been reluctant to invest in an all-new plane until engine technology matures in the next decade. Delays to certification of the MAX 10 in particular could put Boeing's 2020s-bridging strategy under renewed pressure, analysts said.
Boeing's struggles also come under the watchful eye of China, a key market broadly closed to the jetmaker in recent years as MAX safety concerns overlapped with trade tensions. Chinese officials sought updates on the Alaska incident on Saturday, sources said. The first clue to the fallout will be how regulators treat certification of the smallest and least-sold version, the MAX 7, which is next up for approval, said Jeff Guzzetti, a former US air crash investigator.
Meanwhile, Indian carrier Akasa Air on Monday said it has completed a thorough inspection of its entire fleet of in-service Boeing 737 Max planes and that there are no adverse findings. The Directorate General of Civil Aviation (DGCA), on January 5, directed domestic airlines to immediately carry out inspection of emergency exits of all Boeing 737-8 Max planes in their fleets as an "abundant precautionary measure" in the wake of the Alaska Airlines incident.
On January 4, an Alaska Airlines plane's outer section, including a window, fell off mid-air and the aircraft involved was Boeing 737-9 Max.
In a statement on Monday, Akasa Air said subsequent to the guideline issued by DGCA, it has completed a thorough inspection of its entire fleet of in-service Boeing 737 Max aircraft. "We can confirm that there are no adverse findings. We can also confirm that there was no disruption to our operations during this time," it said.
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