Boeing is facing some trouble after a piece of one of their planes was torn off during takeoff, causing the federal government to ground dozens of aircraft pending an investigation.
The incident in question occurred on Jan. 5 and involved a Boeing 737 Max 9, operated by Alaska Airlines, which took off from Portland, Oregon. Shortly into the flight, door plugs on the aircraft blew out, causing phones and other items to be sucked outside of the plane.
Videos of the harrowing scene quickly spread on social media, with many expressing anxieties about flying in such planes and questioning where Boeing might have gone wrong. The FAA acted quickly and ordered inspections for certain Boeing 737 Max 9 aircraft operated by U.S. airlines or on American territory. In total, some 171 airplanes will be affected by the grounding order.
“The FAA is requiring immediate inspections of certain Boeing 737 Max 9 planes before they can return to flight,” FAA Administrator Mike Whitaker said. “Safety will continue to drive our decision-making as we assist the NTSB’s investigation into Alaska Airlines Flight 1282.”
Boeing, which has faced blowback in the past after other notable incidents involving the 737 Max, felt the repercussions as soon as markets opened on the Monday following the Friday evening incident.
Boeing shed as much as 8% of its total value as the markets opened. As of Jan. 5, the company’s stock was still down about 7% from before the incident, showing that investors remain nervous about what is to come for the aircraft and the company.
Notably, companies downstream of Boeing were also feeling the heat. Suppliers of aircraft parts like Spirit AeroSystems Holdings, Hexcel Corp., and Triumph Group all saw their stocks tumble in the wake of the kerfuffle.
Jungho Suh, an assistant professor at the George Washington University School of Business, told the Washington Examiner that this adds to a string of misfortunes involving the aircraft in question.
For instance, back in 2018, a Lion Air flight in Indonesia crashed shortly after takeoff, killing all 189 people on board. Just months later, in March 2019, an Ethiopian Airlines flight crashed minutes after takeoff and also killed everyone on the plane.
The combined 346 deaths, and the fact that both planes were Boeing 737 Max variants, prompted groundings of the aircraft across the globe. Boeing stock dropped at the time.
Suh said he thinks that Boeing needs to take a step back given the most recent incident and reevaluate how it approaches safety and its overall business model. Suh said that the most important thing Boeing can do right now is prioritize safety, and in the long run that would improve shareholder value.
“Based on the track record of these Boeing incidents, it couldn’t be more imperative that the company changes high-level management approaches,” he said. “Their passengers’ lives depend on their product and business model.”
Airbus is Boeing’s main competitor. While Boeing has seen its stock price fall over the past several days, Airbus has reaped positive gains from the situation. Airbus’s stock popped immediately after markets opened on Monday, and as of Jan. 10 was up nearly 4.4% in the past five days alone.
Suh said that, from a short-term perspective, Airbus might receive a bit of a boost from Boeing’s misfortune. Still, he noted that both Airbus and Boeing are in the same industry, so they face the same issues with balancing safety and profitability.
As videos of the Alaska Airlines incident circulate on social media, it might give some customers pause when picking out flights. For instance, they might try to avoid flights that are operated using the 737 Max, although Suh pointed out that the volume of such planes and limited options make picking and choosing tricky.
“There are not many players in the business,” Suh said.
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Boeing CEO Dave Calhoun said during a town hall staff meeting this week that a panel blowout “can never happen again.” He also vowed that the company is going to approach it “with 100% and complete transparency every step of the way.”
“I got kids, I got grandkids, and so do you. This stuff matters. Everything matters, every detail,” Calhoun said. “I know I’m preaching to the choir here, this isn’t a lecture, not by any stretch. It’s nothing more than a reminder of the seriousness with which we have to approach our work.”
