The demolition of a cabin part of a Boeing 737 Max 9 raises new questions about the safety and quality of the US manufacturer Boeing’s aircraft. The company’s shares have collapsed on the stock exchange.
After the dramatic incident with a Boeing 737 Max 9, the US aircraft manufacturer Boeing is also under great pressure on the stock market. On Wall Street, the company’s shares lost more than eight percent at the start of trading in the USA and fell to their lowest level since November.
This means Boeing is at risk of losing more than $12.5 billion in market value. Boeing shares listed in Frankfurt also plummeted today, temporarily losing up to nine percent.
The reason for the sharp fall in the price of Boeing shares is the demolition of a part of the cabin including the window during a flight on Friday on a Boeing 737 Max 9. The plane had to turn around shortly after takeoff and landed in Portland around 20 minutes later. As a result, the US regulatory authority FAA imposed a temporary ban on aircraft of this type, and numerous airlines around the world withdrew the Boeings from service.
“Safety is top priority”
American air security also drew conclusions from the incident: The FFA announced at the weekend that there would be immediate inspections of the 737 Max 9 aircraft, each of which would take around four to eight hours. Analyst Sheila Kahyaoglu from US investment bank Jefferies estimates that the inspections will cost Boeing $1.7 million in direct costs. Only then can the jets operated by US airlines or traveling on American territory go back into operation. There are 171 aircraft worldwide.
Following the FFA’s announcement, Boeing said it supported the decision to ground the aircraft for a safety inspection: “Safety is our top priority and we deeply regret the impact this event has had on our customers and their passengers.”
Errors accumulate
At Boeing, the accident follows a series of development and production errors. There were always problems with the “Max”. Boeing recently asked airlines to check the system that controls the Max’s rudder for loose screws. In early 2023, incorrectly drilled holes and improper fittings were also found in some of the jets.
And now a side piece that had fallen out and was installed in the fuselage of the aircraft instead of an emergency exit. “This type of failure should not happen on any aircraft, but for it to happen on a three-month-old aircraft is unacceptable,” Nick Cunningham, an analyst at Agency Partners, told the Financial Times. “This reinforces the impression that Boeing has forgotten how to build airplanes.”
Even faster production?
Particularly in view of the devastating design errors that led to two fatal crashes and a global grounding of the 737 Max series in 2018 and 2019, the latest incident could have far-reaching consequences for Boeing. After the crashes, Boeing revised the “Max” type and gradually regained approvals and trust. The disaster cost the manufacturer billions. Now trust in the quality of Boeing aircraft is once again at stake.
Critics had accused the company of putting quantity over quality for the US manufacturer. After struggling with delivery problems for months, Boeing recently tried to increase production rates. According to the Financial Times, Boeing is currently building 38 jets per month at one of its factories near Seattle. This is expected to increase to 50 per month by the middle of the decade. The latest incident now raises questions, say industry observers. “How is the quality control going as they try to ramp up?” Bank of America analyst Ron Epstein told the FT.
In the red for years
It would be important for Boeing to ramp up production. The group has set itself ambitious financial goals. He wants to have annual available liquid assets of ten billion dollars by 2026.
Since aircraft manufacturers are only paid upon delivery, the pace of production when placing orders is an important factor in the group’s success. Boeing has been in the red for years: after four years of losses in a row, there were also signs of a minus on the balance sheet for 2023.