The recent Ethiopian Airlines crash has been big news across the globe. For a second time in just a few months, a Boeing 737 Max 8 plunged towards the ground just minutes after take off. Since the crash the US Federal Aviation Administration (FAA) has insisted that the 737 Max 8 remains an airworthy model of jet.
However, in a move that has rarely been seen before, countries are halting flights of the aircraft, against FAA guidance. This has had a noticeable adverse effect on BA shares as they have fallen as much as 6%. This is a story that is set to run as concern over the safety of the Boeing jet has caused around 40% of the total global fleet to be grounded.
The story behind the Boeing disaster
Back in November 2018, when Wired.com reported on a Lion Air crash involving a Boeing 737 Max 8 not many people would have envisaged history repeating itself just a few short months later. At the time sensor problems were found to have been paramount in causing the aircraft to nosedive into the Java Sea. Now an Ethiopian Airlines 737 Max 8 has also crashed within minutes of take-off. Although the cause of the crash has yet to be established, the fact that the exact same model of jet was involved has been enough to start alarm bells ringing.
China and Indonesia were the first countries to ground the latest addition to Boeing’s jet fleet. Now other countries are following suit, including Australia, UK, Germany and Ireland.
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Not just Boeing shares that are affected
The Boeing 737 Max 8 issues are not only affecting Boeing (BA) shares. As thestreet.com reported, parts suppliers are also feeling the brunt of the negative publicity following the second accident with mass fatalities within a few months. The shares of Spirit AeroSystems (SPR) fell by 3.8%, and the shares of Triumph Group (TGI) and Hexcel (HXL) followed suit with falls of 4.2% and 1.6% respectively. This comes at a time when the stock market rally is seeing its first real pullback.
The future for Boeing
The FAA is holding firm in its assertion that the Boeing 737 Max 8 is an airworthy jet. However, throughout the rest of the world, it seems as though caution is being exercised. Countries are not willing to take the risk that their airlines will witness a disaster of the magnitude of the previous two. There is no doubt that the issues with the 737 Max 8 are a major problem for Boeing. This jet is without doubt the company’s most important craft right now and the fact that so many craft are grounded means the immediate future is likely to remain troubled for Boeing.
It remains to be seen what happens when the cause of the latest crash is discovered. However, right now, a major recovery in Boeing (BA) shares seems unlikely and analysts are adjusting their predictions accordingly.