Boeing shares slumped almost 13 per cent as Wall Street opened on Monday after the second fatal crash of one if its 737 MAX 8 planes.
The sell-off wiped around $30bn wiped off Boeing’s valuation leaving the world’s largest plane manufacturer on track to record its biggest single-day trading fall in two decades as concerns mount about a possible technical problem with one of its models.
All 157 passengers and crew aboard an Ethiopian Airlines flight died when the plane crashed shortly after take-off from Addis Ababa in Sunday morning.
No fault has been found and investigators are considering a range of possible causes for the crash.
The Boeing 737 lost contact six minutes after departure from Bole International Airport in the Ethiopian capital, heading for Nairobi.
Comparisons have been drawn with the crash of a Lion Air 737 Max 8 which plunged into the Java Sea minutes after takeoff in October, killing all 189 people on the plane.
What impact might this have on Boeing?
This depends on whether or not the latest crash is related to a fault with the plane.
The shares have sold off on the back of speculation but if it is established that the two tragic crashes were not down to a technical fault, the company’s share price fall will likely turn out to be a temporary blip.
The Boeing 737 is the best-selling commercial aircraft of all time and has an excellent safety record overall. But if a fault were found this could be hugely damaging for the company which is reliant on future sales of the 737, including the MAX 8.
Attention is growing on the anti-stall protection that the manufacturer has deployed in its most modern twin-jets.
The 737 is operated by dozens of airlines around the world and Boeing says 4,754 of its total 5,870 unfulfilled orders are for the 737 family of planes.
The list price of the 737 range is between $89.1m and $134.9m meaning, the total value of those orders could be between $420bn and $640bn. Airlines often secure discounts on these prices however.
Boeing increased production of the popular 737 in the middle of 2018 to 52 aeroplanes per month in an attempt to clear a seven-year order backlog.
Last year Boeing delivered a record 806 commercial aeroplanes with 580 of those being 737’s and half of those being MAX models which are more fuel-efficient than many other jets.
How have airlines have reacted so far?
While the share price has taken a hammering, airlines have understandably taken a measured approach and there is no suggestion that any are considering cancelling their orders.
Virgin Australia has ordered 30 of the planes and a further 10 of Boeing’s 737 Max 10s with the first of the new aircraft due to be delivered by the end of the year.
Virgin said it was too early to comment on whether its order of Boeing 737 MAX 8s will change.
In Europe, holiday operator Tui has ordered 32 Max aircraft and took delivery of its first MAX 8 in December making it the first UK-registered airline to receive one of the aircraft.
The carrier’s German parent company is reported to have bought 54 MAX 8s.
Other airlines in Europe to use the MAX aircraft include Air Italy and Norwegian which are both continuing flights as normal.
Some governments have taken a tougher approach
China’s aviation regulator ordered nearly 100 Boeing 737 MAX 8 aircraft to be grounded by 6pm local time (10am GMT) on Monday.
“Given that two accidents both involved newly delivered Boeing 737-8 planes and happened during take-off phase, they have some degree of similarity,” it said.
Indonesia said on Monday it would temporarily ground the aircraft for inspection.
Cayman Airways, the flag carrier of the British Caribbean territory, has also halted use of the model, while other airlines said they were “continuing to monitor the situation closely”.
What has Boeing said?
“Safety is our number one priority and we are taking every measure to fully understand all aspects of this accident, working closely with the investigating team and all regulatory authorities involved,” a Boeing spokesperson said.
In a statement on Sunday the company said: “Boeing is deeply saddened to learn of the passing of the passengers and crew on Ethiopian Airlines Flight 302, a 737 MAX 8 airplane.
“We extend our heartfelt sympathies to the families and loved ones of the passengers and crew on board and stand ready to support the Ethiopian Airlines team.
“A Boeing technical team will be travelling to the crash site to provide technical assistance under the direction of the Ethiopia Accident Investigation Bureau and US National Transportation Safety Board.”
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