Boeing's shares plunge 9% after Ethiopian Airlines' plane crash
The stock tanked 8.88% or US$37.54 to US$385.00 at 4.40am, New York time after Ethiopian Airlines flight 302 using a Boeing’s 737 Max plane crashed within minutes from take-off on Sunday, causing 157 people to lose their lives.
Shares of Boeing Co took a nosedive during pre-market hours on Monday, with the stock tanking 8.88% or US$37.54 to US$385.00 at 4.40am, New York time after Ethiopian Airlines flight 302 using a Boeing’s 737 Max plane crashed within minutes from take-off on Sunday, causing 157 people to lose their lives.
Ethiopian Airlines flight ET302 had plunged to the ground minutes after leaving Addis Ababa enroute to Nairobi, Kenya. The freak accident was the same type of plane that had crashed in Indonesia in October which killed 189 people, raising questions on the safety of the airline company’s bestselling 737s.
China on Monday morning ordered to temporarily ground all Chinese airlines until further notice from the use of Boeing’s 737 Max planes. The announcement drew concerns from observers on Boeing’s 737 business as the country’s carriers take up around 20% of 737 Max deliveries globally through January.
Boeing’s stocks closed Friday’s session flattish, higher by 0.05% or US$0.21, at US$422.54.
Dow Jones to face pressures from Boeing’s slide
The shares of the airplane manufacturer have gained more than 30% this year, adding more than US$55 billion in market cap amid positive sentiments over the United States (US)-Sino trade talks and a record cash pile announcement from the firm last year with sales hitting US$100 billion for the first time in its 102 years.
The aircraft manufacturer's stock is an integral part of the price-weighted Dow Jones and the S&P 500, and Boeing’s shares have been one of the top performers in the Dow Jones this year.
Signs of strain are showing as seen from futures contracts on the Dow Jones Industrial Average Index which slid 0.7% on Monday.
In October, when the Lion Air 737 Max crashed into the ocean, Boeing’s stock had fallen 6.6% partly due to the accident.
Concerns on plane’s safety raises questions on delivery orders
In May 2017, Boeing had suspended test flights for its new 737 Max aircrafts due to quality concerns with the engine. The engines are produced by CFM International, a company jointly owned by France's Safran Aircraft Engines and GE Aviation.
The two plane accidents which occurred within five months from each other, places Boeing’s 737 Max in a fix as more than 5,000 deliveries are planned for that model. In January, only about 350 planes were delivered, which means the airline manufacturer has thousands of planes left to deliver.
The new Max which represents three-fifth of the company’s production till 2032, is an important program for Boeing in the next decade and Boeing has to prove on the reliability of the plane model before it continues to deliver its orders.
China has meanwhile, grounded nearly 100 Boeing 737 Max aircrafts operated by its airlines, which makes up more than a quarter of the global fleet of jets already in service.
Following Sunday's tragedy, Ethiopian Airlines have also grounded its fleet of Boeing 737 Max planes. Citizens from 35 countries were among the people killed in Sunday’s plane crash, including 32 Kenyans, nine Ethiopians, and 8 passengers each from China and the US.
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