All the Boeing turbulence also on the stock market
Since the Alaska Airlines flight crash in January, Boeing shares are posting their worst string of losses since 2018 on Wall Street. Facts, numbers and insights
Not only in the skies, Boeing's problems also spill over into the stock market: its share price has fallen by almost a third this year.
After a disastrous start to 2024 with the door blowing out of the 737 Max 9 during Alaska Airlines Flight 1282 on January 5, the American plane maker is under scrutiny from authorities and is losing a lot of money and consumer confidence in the in the meantime. Now Boeing is adding another item to its long list of things that have gone wrong this year: Its shares are having their longest losing streak since 2018, Quartz finds.
Shares of the American giant fell by about 2% in trading on Friday, and have fallen by almost 35% since the beginning of the year. This is the second worst performance among S&P 500 stocks in 2024, behind the insurance company Globe Life, targeted by short sellers, underlines the American newspaper.
All the details.
THE CRISIS TRIGGERED BY THE ALASKA AIRLINES ACCIDENT
The year started badly for Boeing with the crash of Alaska Airlines Flight 1282 when a window literally blew out in mid-flight. Fortunately, over 170 passengers and crew on board were unharmed.
This triggered a series of problems that have afflicted Boeing planes from various airlines in recent months and which have led the American authorities to investigate and carry out safety checks.
As Reuters recalls, following that accident, the FAA grounded the Max 9 for several weeks, after which it barred Boeing from increasing the Max's production rate and ordered the company to prepare a comprehensive plan to address "issues quality control systems” within 90 days.
Boeing's production has fallen below the maximum limit of 38 Max planes per month allowed by the FAA. Meanwhile, the Department of Justice has opened a criminal investigation into the Max 9 crash.
Following the crash of Flight 1282 and the grounding of the Boeing 737-9 Max, the company lost approximately $160 million in pre-tax profit in the first quarter, primarily comprising lost revenues, costs due to irregular operations and to restore the fleet to operational service.
In early April, Alaska Airlines received initial compensation from the manufacturer to address financial damages suffered following the crash of Flight 1282 and the 737-9 Max, according to a SEC filing. As part of this compensation, Boeing paid Air Group about $160 million in cash during the first quarter. This cash payment equates to lost profits from the accident and grounding in the first quarter of 2024.
REFLECTIONS ON THE TITLE
These difficulties have influenced the performance of Boeing's shares on Wall Street.
According to Quartz , “what is interesting is that none of the downward moves resulted in a daily loss of more than 2%. This is not a big drop, but a steady drip of negative sentiment from the market. The last time things got this bad, Boeing was dealing with a different problem with the 737 Max, after a 737 Max 8 plane crashed shortly after takeoff.”
THE POSITION OF MANAGEMENT
Meanwhile, American society is trying to take action.
“There are changes that need to happen,” Boeing Chief Financial Officer Brian West said at a recent conference. "There is no doubt." In an effort to overcome these difficulties, Boeing CEO Dave Calhoun announced his exit by the end of 2024 . The head of the commercial aircraft division, Stan Deal, and the chairman of the board of directors, Larry Kellner, will also leave the company. However, at the moment the company has not yet communicated the new leaders.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutte-le-turbolenze-di-boeing-anche-in-borsa/ on Tue, 16 Apr 2024 06:28:18 +0000.