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As Boeing stock enters its second week of volatile trading following the 737 MAX 9 accident, and it’s still not quite clear whether its shares have been punished enough—or if there is more pain ahead.
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Tag: ALK
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Boeing’s financials won’t be hurt by latest 737 Max issues, analysts say. The company’s size is one reason.
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Alaska Airlines, United Airlines and Turkish Airlines have all grounded their Boeing 737 Max 9 airplanes after part of one such jet tore away during an Alaska Airlines flight on Friday. But despite the potential safety risks for travelers and further damage to Boeing’s
BA,
-8.03%
reputation, some Wall Street analysts, for now, have downplayed the financial impact for the jet maker.In part, they pointed to the company’s status as one of two major players in aircraft production — the other being Airbus
EADSY,
+3.52% .
They also cited a tighter supply of available aircraft and limited near-term impact, at least while investigators try to figure out the cause of the incident.Those airlines and others took the action over the weekend after a panel on a jet blew out about 10 minutes into Alaska Airlines Flight 1282 at an altitude of about 16,000 feet.
No one died in the incident. But the Federal Aviation Administration ordered the temporary grounding of certain Boeing 737 Max 9 aircraft. The order covered 171 planes.
Shares of Boeing fell 8.2% as the stock weighed on the Dow Jones Industrial Average
DJIA.Still, some Wall Street analysts on Monday said to buy the stock anyway. They said the latest difficulties with the aircraft — which follow the 2019 grounding of Max jets by many nations following two fatal crashes — were unlikely to have a big near-term financial impact.
BofA analysts, in a research note dated Sunday, said that “at this point in time, due to the duopoly nature of the industry, we do not see this impacting orders for any of the 737 MAX variants. However, if the hits to the program do keep coming … at some point, the flying public may lose confidence in the 737 MAX which could ultimately impact sales.”
The analysts said it wasn’t clear yet whether the blowout on Friday was due to an assembly mistake at Boeing, an improper installation from fuselage maker Spirit AeroSystems or oversight issues elsewhere. But they noted that the aircraft was relatively new, having been delivered on Oct. 31. And they said that “some scrutiny must be saved for regulators as well, as the FAA is ultimately responsible for certificating these aircraft before delivery.”
Spirit AeroSystems’ stock
SPR,
-11.13%
was down 11%.Analysts at William Blair also said they didn’t expect a big hit to Boeing’s financials.
“While the Alaska Airlines door plug accident was terrifying, we do not believe that it will have a major financial impact, unless another incident occurs after the aircraft returns to service,” they said in a note on Monday.
Analysts there estimated that over the past two months, the Max 9 made up less than one-fifth of Boeing’s total deliveries. They said those deliveries would only be “modestly impacted over the first quarter as it could take some time to determine the cause.”
Of the 23 analyst ratings on Boeing’s stock tracked by FactSet, 18 are buy ratings or the equivalent.
Read more: How Boeing’s latest 737 Max problem is hurting the Dow
However, Morgan Stanley analyst Ravi Shanker said the 737 Max 9 issues will likely disrupt first-quarter results for United Airlines
UAL,
+2.78%
and Alaska Air
ALK,
-0.21% .“This will hopefully be a situation resolved in days/weeks rather than months, but it will also serve as a reminder of how fragile airline capacity can be despite the overhang of capacity,” Shanker said in a Monday research note.
United Airlines’ stock rose 2.4% on Monday, while Alaska Air’s dipped by 0.3%.
Along with United Airlines, Alaska Airlines and Turkish Airlines, Copa Airlines and Aeromexico grounded about 40 Boeing 737 Max 9 planes, according to reports.
According to Deutsche Bank analysts, the affected fleet accounts for 16.1% of Alaska Airlines flights and 6.6% of United flights, although United has more 737 Max 9 aircraft than Alaska.
Other airlines with the plane in their fleet include Jet Airways of India with one plane, Jin Air of Korea with three, KLM Royal Dutch Airlines
KLMR,
with five and Korean Air Lines
003490,
-1.52%
with nine, according to Planespotter.net.European regulators also grounded the 737 Max 9 for inspection.
Some major airlines do not have any 737 Max 9s in their fleets, including American Airlines
AAL,
+7.21% ,
Southwest Airlines
LUV,
-0.10%
and Air Canada
AC,
+3.42% ,
according to reports.Also read: Shares in Boeing slump, supplier Spirit AeroSystems tanks, after panel blows out
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Alaska Airlines grounds all Boeing 737-9 Max planes after flight suffers midair window blowout
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Alaska Airlines grounded all of its Boeing 737-9 aircraft late Friday, hours after a window and piece of fuselage on one such plane blew out in midair and forced an emergency landing in Portland, Oregon.
The incident occurred shortly after takeoff and the gaping hole caused the cabin to depressurize. Flight data showed the plane climbed to 16,000 feet (4,876 meters) before returning to Portland International Airport.
The airline
ALK,
+3.10%
said the plane landed safely with 174 passengers and six crew members.“Following tonight’s event on Flight 1282, we have decided to take the precautionary step of temporarily grounding our fleet of 65 Boeing 737-9 aircraft,” Alaska Airlines CEO Ben Minicucci said in a statement.
Each of the aircraft will be returned to service after full maintenance and safety inspections, which Minicucci said the airline anticipated completing within days.
The airline provided no immediate information about whether anyone was injured or the possible cause.
The plane was diverted about about six minutes after taking off at 5:07 p.m., according to flight tracking data from the FlightAware website. It landed at 5:26 p.m.
The pilot told Portland air traffic controllers the plane had an emergency, was depressurized and needed to return to the airport, according to a recording made by the website LiveATC.net.
A passenger sent KATU-TV in Portland a photo showing the hole in the side of the airplane next to passenger seats. Video shared with the station showed people wearing oxygen masks and passengers clapping as the plane landed.
The National Transportation Safety Board said in a post on X, formerly known as Twitter, that it was investigating an event on the flight and would post updates when they are available. The Federal Aviation Administration also said it would investigate.
The Boeing 737-9 MAX involved in the incident rolled off the assembly line and received its certification just two months ago, according to online FAA records.
The plane had been on 145 flights since entering commercial service on Nov. 11, said FlightRadar24, another tracking service. The flight from Portland was the aircraft’s third of the day.
Boeing
BA,
+1.66%
said it was aware of the incident, working to gather more information and ready to support the investigation.The Max is the newest version of Boeing’s venerable 737, a twin-engine, single-aisle plane frequently used on U.S. domestic flights. The plane went into service in May 2017.
Two Max 8 jets crashed in 2018 and 2019, killing 346 people and leading to a near two-year worldwide grounding of all Max 8 and Max 9 planes.
The planes returned to service only after Boeing made changes to an automated flight control system implicated in the crashes.
Last year, the FAA told pilots to limit use of an anti-ice system on the Max in dry conditions because of concern that inlets around the engines could overheat and break away, possibly striking the plane.
Max deliveries have been interrupted at times to fix manufacturing flaws. The company told airlines in December to inspect the planes for a possible loose bolt in the rudder-control system.
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ALK Stock Price | Alaska Air Group Inc. Stock Quote (U.S.: NYSE) | MarketWatch
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Alaska Air Group Inc.
Alaska Air Group, Inc. is a holding company, which engages in the provision of air transportation services. It operates through the following segments: Mainline, Regional, and Horizon. The Mainline segment includes scheduled air transportation on Alaska’s Boeing and Airbus jet aircraft for passengers and cargo throughout the U.S., and in parts of Mexico, Costa Rica and Belize. The Regional segment consists of Horizon’s and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the U.S. and Canada under capacity purchase agreements (CPA). The Horizon segment encompasses the capacity sold to Alaska under a CPA. The company was founded in 1985 and is headquartered in Seattle, WA.
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