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Boeing (BA) stock is in the red after indications emerged that the 737 MAX may not carry passengers again any time soon.
Boeing Company (NYSE: BA) stock price is down in the pre-market. It is happening as the uncertainties surrounding the Boeing 737 MAX is beginning to grow. This has made Boeing (BA) stock suffer even more after having a tough downturn this year. At the time of filing this report, Boeing (BA) stock price in the pre-market, was 0.91% down, at $177.00. Just to compare, 12 months ago, BA stock was trading at around $373.
Sources say that the U.S. Federal Aviation Administration (FAA) may not lift its 2019 March grounding order anytime soon. The situation may stay the same till October or November this year. The reason for this is that the FAA only recently asked for comments from the public.
Another issue that is slowing the process down is the COVID-19 pandemic. Activities may not pick up until next year. Even at that, the situation will remain choppy. Pilot retaining and maintenance checks could reach the end of the year.
Boeing (BA) Stock Price Is Down, CEO Is in the Hot Seat
The jets may return to the air after that. It puts Boeing CEO David Calhoun in a tough position. As long as the 737 Max remains grounded, Boeing will have liabilities on the books. Added to that is the loss of customer confidence in the highly competitive aviation industry.
Already, things are hard enough for the company. The company lost $1.35 billion in the first quarter. These losses are going to rise in the second quarter as well.
Boeing isn’t the only company going through this. With a Q1 €8.5 Billion negative cashflow, Airbus SE (EPA: AIR) is also having a hard time running its operations. Summer is supposed to improve things in the aviation industry. The situation remains unpredictable this time as the COVID-19 pandemic is very much around.
Until there is a working vaccine for the coronavirus, things won’t improve. Boeing had already started reducing orders from suppliers due to the slowdown in activities. It is another slowdown that will hurt production for a bit.
737 MAX Got Grounded After Two Fatal Aircrashes
The 737 MAX got grounded by the FAA after a string of crashes last year. These crashes occurred in October 2018 and March 2019. The Lion Air Flight JT 610 went into the Java sea on October 29, 2018, killing all of the 189 people on board.
The Ethiopian Airlines Flight 302 crashed on 10th march 2019 killing all 157 people on board. 346 people died from both Boeing 737 crashes. Civil aviation authorities all over the world grounded the 737 MAX after that.
Initial investigations revealed similarities in both crashes. Boeing had in October 2018 installed a new flight automation system. That system is the Maneuvering Characteristics Augmentation System (MCAS). It appears that planes with MCAS installed can dip if not corrected. The plane’s nose will push down.
MCAS wasn’t mentioned in the aircraft manuals. Boeing had issued a service bulletin. The FAA issued an Airworthiness directive. The directive was to show flight recovery procedures. The FAA then allegedly predicted that the MCAS system could cause more accidents. A Boeing (BA) software update was supposed to patch things up.
It appears that for now, the Boeing 737 MAX is safe to fly. Time shall tell if this situation will stay the same.