Shares of Boeing and one of its key suppliers dropped sharply on Monday as investors grew worried about possible damage to the businesses after a piece of fuselage on a Boeing 737 Max 9 blew out mid-flight.
The Alaska Airlines flight, which had been traveling from Portland, Oregon, to Ontario, California, on Friday, made an emergency landing after part of the wall of the aircraft detached itself, leaving a gaping hole in the side of the plane. The cause of the incident has not been determined.
The Federal Aviation Administration on Saturday ordered all Boeing 737 Max 9 aircraft to be grounded until they can be carefully inspected. The order applies to 171 planes around the world, and airlines in Turkey and Panama have also grounded flights.
Aviation trial attorney Robert Clifford told CNN the incident will have reputational repercussions for Boeing and the company will likely be on the hook to pay airlines for lost revenue.
Boeing (BA) shares dropped more than 8.5% by 9.50 am E.T., while shares of aerospace supplier Spirit AeroSystems (SPR) fell by about 11.5%. The company manufactured and completed the initial installation of part of the plane's fuselage, Reuters reported, citing unnamed sources. Spirit did not immediately respond to a request for comment.
The incident is the latest in a long string of problems for Boeing. Since the grounding of the 737 Max in March 2019, following two crashes that killed 346 people, Boeing's financial losses have mounted.
The company reported an annual loss for four straight years from 2019 to 2022, and logged a $2.2 billion net loss for the first nine months of last year. Its full-year results for 2023 are due at the end of January.
Boeing's share price has recovered since the pandemic threw the global airline industry into turmoil but is still nearly 35% down from its peak in February 2020.
In comparison, shares in Airbus, Boeing's European rival, are trading above their pre-pandemic peak, and were up 2.6% from their previous close in Paris by 9.41 a.m. ET on Monday.
Together, Airbus and Boeing dominate the global aviation market. But Airbus overtook its American counterpart in 2018 in the number of jets it delivered to customers, and has stayed out in front ever since.
In 2023, Airbus delivered 623 jets to customers within the first 11 months, compared with 461 for Boeing. Airbus will announce its full-year deliveries on Thursday, a company spokesperson told CNN.
Some of Boeing's woes have been beyond its control. Trade tensions between the US and China have largely closed off that key growth market. But the company has faced repeated quality and safety issues with its aircraft over the past five years.
Ten days ago, Boeing asked airlines to inspect all of their 737 Max jets for loose bolts in the rudder system, after an unnamed international carrier discovered a potential problem with the key part on two aircraft.
(The-CNN-Wire & 2023 Cable News Network, Inc., a Time Warner Company. All rights reserved.)