Details remain fuzzy on the Monday crash of a Boeing 737-800 in China that was carrying 132 passengers and crew members.
As investigators continue to try to uncover how the crash occurred, investors need to keep a close watch on developments, given Boeing‘s
(ticker: BA) recent history.
Passengers were traveling to the southern city of Guangzhou, according to flight tracker FlightRadar24, The plane had achieved its cruising altitude and speed of about 457 knots, or about 525 miles an hour. The flight was about one hour out from its origin in Kunming when the plane lost about 26,000 feet of altitude in roughly four minutes, before falling off the radar.
Video footage appears to show the jet in an extremely steep decent, with the nose of the plane toward the ground, before it crashed into a “wooded mountainous area,” according to the Aviation Safety Network,
There were no survivors.
Reports Friday indicate a part of the plane was found miles from the crash site. The part hasn’t been identified. It is too early to speculate on what that means for the crash investigation.
When Will We Know What Happened?
The recorder data still should mean that more details about the flight will emerge in a couple of days, though a full investigation could take months. Investigators will be looking at pilot actions, plane maintenance records, and plane design to help determine what happened. flight data recorders are manufactured by Honeywell International (HON).
The National Transportation Safety Board has appointed a senior-air safety investigator to look into the crash as well. Representatives from Boeing, the Federal Aviation Administration, and General Electric (GE) will serve as advisors. The engines for the 737-800 model come from CFM International, a 50/50 joint venture between GE and Safran (SAF.France).
Why Are Investors Concerned?
Investors are worried mainly because of the history with a more recent model of the 737, the MAX. Boeing 737 MAX model jets were grounded worldwide between March 2019 and November 2020 after two fatal crashes within a five-month span. The MAX problems, along with Covid-19, have driven Boeing stock down about 57% from the record high it reached just before the second MAX crash.
It is important to remember that the plane that went down wasn’t a MAX. The 737-800 was from an earlier 737 model, dubbed Next Generation, or NG. More than 7,000 NGs have been delivered since 1997.
The plane’s safety record is excellent—on par with competitive products and with other commercial aviation platforms through time. The China Eastern Airlines 737-800 that crashed was delivered in 2015.
What is Boeing Saying?
Boeing has expressed concern in several statements and pledged to cooperate with investigations. In a staff memo, CEO Dave Calhoun wrote Monday, “We have been in close communication with our customer and regulatory authorities since the accident, and have offered the full support of our technical experts to the investigation led by the Civil Aviation Administration of China. “
Boeing released a statement on Saturday morning after the official word came regarding the fate of those on board. “We extend our deepest condolences for the loss of those on board China Eastern Airlines Flight MU 5735,” a company spokeswoman said. “Our thoughts and prayers are with the passengers and crew, their families and all those affected by this accident.”
What Is Wall Street Saying?
Analysts have taken a cautious approach to the crash, writing they are waiting for details to emerge. No one has cut a price target or changed a rating on Boeing stock in response so far.
Overall, Boeing stock has been rising in popularity with analysts since early 2021. Wall Street has generally expected earnings and cash flow to recover as Boeing continues to emerge from MAX-related problems and as Covid-related restrictions are relaxed, encouraging air travel and demand for jets.
Currently, 75% of analysts covering the shares rate them at Buy. In early 2020, at the depths of the MAX and Covid crises, only 45% of analysts covering the stock had a Buy rating.
How Is Boeing Stock Responding?
Boeing stock closed Friday, March 18, at $192.83. The following Monday, the day of the crash, the shares traded as low as $180.61, for a loss of more than 6%, before closing at $185.90, off about 3.6%.
Boeing closed shares down 2% for the week. The S&P 500 added 1.8%, while the Dow Jones Industrial Average rose 2%.
Write to Al Root at [email protected]
Credit: www.marketwatch.com /