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Rescuers head to the site of a plane crash in southern China on March 22, 2022.
STR/AFP via Getty Images
A
Boeing
737-800 carrying 132 passengers and crew members crashed in southern China on Monday—and details have been fuzzy.
As investigators continue to try to uncover how the crash occurred, investors need to keep a close watch on developments, given
Boeing
’s
recent history.
What Happened?
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.
No survivors were found by rescue teams, according to reports.
Why Are Investors Concerned?
Investors are worried mainly because of the history with Boeing’s more recent 737 model, the MAX. Boeing (ticker: BA) 737 MAX model jets were grounded worldwide between March 2019 and November 2020 after two deadly crashes within a five-month span. The MAX problems, along with Covid-19, have driven Boeing stock down about 57% from its all-time high set just before the second MAX crash.
However, 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
(CEA) 737-800 that crashed was delivered in 2015.
When Will We Know What Happened?
One of the flight data recorders was recovered Wednesday, according to reports. It isn’t known yet if it is the flight data recorder or the cockpit voice recorder. In either case, the data contained 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).
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. “
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 issues and Covid-related restrictions fade.
Currently, 75% of analysts covering shares rate them 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 this past Friday at $192.83. Shares traded as low as $180.61 Monday morning, down more than 6%, before closing Monday at $185.90, off about 3.6% for the session.
Since Friday’s close, Boeing stock has fallen about 3.5%, coming into Thursday trading. The
S&P 500
is down about 0.2%, while the
Dow Jones Industrial Average
is down 1.1% over the same span.
In premarket trading Thursday, shares are trading at $187.20, up about 0.6%.
Write to Al Root at [email protected]
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