(New York) Boeing’s stock plunged nearly 8% on Tuesday at the close of the New York Stock Exchange, with increased surveillance following the unhooking of a plane’s door in mid-flight likely to weigh heavily on its financial performance.
The stock is at its lowest level in two months.
A Wells Fargo analyst report, released Tuesday, warned that an audit by the Federal Aviation Administration (FAA), the US regulator, “opens a whole new can of worms”, and that multiple consequences are expected.
Wells Fargo downgraded Boeing’s stock in part due to a slowdown in planned 737 MAX deliveries in 2024, which will reduce free cash flow by $2 billion, compared to an earlier analysis, it says. .
“Given Boeing’s recent track record and the FAA’s greater incentive to detect problems, we believe the chances of a clean audit are low,” Wells Fargo said.
A door came off on January 5 from the cabin of a Boeing 737 MAX 9 during an Alaska Airlines flight which was supposed to connect Portland, Oregon to Ontario, California, but the incident did not only a few minor injuries and the plane was able to land safely at its original airport.
The FAA has grounded Boeing 737 MAX 9s until further notice, and launched an investigation into the incident, the first major flight safety issue on a Boeing plane since fatal 737 MAX crashes in 2018 and 2019 that led to a long immobilization of the plane.
The agency said those aircraft would not be allowed to fly again until it approved a “thorough and rigorous inspection and maintenance process.”
On Friday, United Airlines canceled flights operated on its 737 MAX 9s through Jan. 16, and an airline spokesperson said Tuesday that the cancellations had been extended through Jan. 17.
And the Chinese airline China Southern Airlines will inspect its new deliveries of these aircraft, which could extend delivery times, according to the Wall Street Journal.
Separately, Boeing on Tuesday named retired Adm. Kirkland Donald as an advisor to Boeing Chief Executive David Calhoun to undertake a “comprehensive” review of Boeing’s quality programs and practices.