Boeing shares tank as FAA halts MAX production expansion
Shares in Boeing dropped on Thursday after the Federal Aviation Administration ordered the aerospace manufacturer to stop a production expansion of its 737 MAX model on the same day US airlines expressed anger at the company's recent quality failings.
Alaska Air Group Inc.
$47.23
11:10 04/11/24
American Airlines Group
$12.99
12:59 04/11/24
Boeing Co.
$155.07
11:10 04/11/24
Dow Jones I.A.
41,794.60
04:30 15/10/20
Nasdaq 100
19,963.60
12:15 04/11/24
Southwest Airlines Co.
$29.91
11:10 04/11/24
In the aftermath of the 5 January fuselage blowout incident involving an Alaska Airlines Boeing 737-9 MAX, the FAA has said it will not grant Boeing permission to continue with a planned production increase of the MAX.
As the FAA continues its investigation and ramped up oversight of Boeing and its suppliers, the regulator said a thorough inspection and maintenance process must be performed on each of the grounded 171 Boeing 737-9 MAX aircraft before they can be eligible to return to service.
The stock was down 6% at $201.51 by midday in New York, extending its year-to-date loss to 20%.
“The exhaustive, enhanced review our team completed after several weeks of information gathering gives me and the FAA confidence to proceed to the inspection and maintenance phase," said FAA Administrator Mike Whitaker.
“However, let me be clear: This won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved.”
The news came on the same day that Alaska Airlines, which only uses Boeing planes, unveiled a $150m hit to profits from the grounding of flights related to the incident as it reported its latest quarterly results, and said it would likely not make its previous targets for capacity growth.
In an interview with NBC News on Thursday, Alaska chief executive Ben Minicucci said regarding the recent woes: “I’m more than frustrated and disappointed. I am angry.”
Southwest Airlines also announced that it would cut the 737 MAX 7 aircraft from its fleet plans for 2024, following a similar announcement earlier in the week from United Airlines.
Meanwhile, in a post-results conference call with analysts, American Airlines chief executive Robert Isom said "Boeing needs to get their act together" and a labelled the quality issues "unacceptable", as the airline outlined expectations of scaled back Boeing deliveries this year.