The market didn't panic Monday after the China Eastern Airlines plane crashed into the mountains in Ethiopia. While boeing shares fell‚ the rest of the aviation supply chain was still in good shape. A few years ago‚ boeing's MAX model‚ which is the successor to the 737‚ also crashed into the mountains. Two months later‚ the Next Generation jets were grounded‚ and the crash was followed by further safety incidents. This is a situation similar to the one that occurred in Indonesia‚ in which two 737 MAX jets crashed‚ killing all 189 people on board. The crash happened on Sunday and caused Boeing's stock to plunge by more than 3% in late trading‚ which was already lower than the opening price. That's an impressive performance‚ and investors should be worried. While the investigation into the cause of the crash is ongoing‚ the company's stock has already dropped by nearly 60%. The plane's insured value is around $50 million. The airline hasn't disclosed its financial condition‚ but it said it would reimburse passengers after a crash. So‚ it's easy to understand why Boeing isn't concerned about the 737 crash. This accident was the result of the crash of The Boeing 737 MAX model. It was the first fatal accident for this model. Another flight from China Eastern Airlines crashed into the mountains‚ and the plane's MAX model had been in use since 2001. As a result‚ the MAX jets were grounded until mid-November 2020‚ and two crashes in five months has reduced their production rate. As a result‚ the stock of Boeing fell more than 4%. Although the crash has caused a huge downturn for the markets‚ there's no immediate reason to panic. The Boeing 737 crash is not going to affect Boeing's upcoming deal with China‚ which is the biggest buyer of aircraft in the world. In the meantime‚ if the accident is deemed to have been due to human error‚ the stock's price could fall significantly. The 737 crash may not affect the market at this time‚ but it will likely affect Boeing's share price. The stock's value is down about 60% from its all-time high‚ and the aircraft's insured value is probably around $50 million. Moreover‚ the crash could have caused other major losses for the aerospace industry‚ which is one of the reasons why the 737 MAX is not being used as a primary airline. The 737 MAX model crashed into the Alps in China last week.
It was a year ago that the MAX version of the 777 was ground for two months. After the crash‚ the MAX jets were grounded for six months‚ and the second was grounded until mid-November. While the MAX jet is still being ground‚ the stock price is still down a few percent‚ and there are no indications that the pilot was at fault for the crash. While the MAX crash isn't causing huge market losses‚ the crash's impact on the airline's stock has been felt by the entire aviation industry. The company's stocks are down more than 60% since the first crash‚ and the MAX planes have been grounded for over five months. Despite this‚ the 737 MAX has returned to service and the company has received about 180 service difficulty reports since the second crash. The MAX crash was the third fatal crash of a Boeing 737 MAX last month. The MAX was a predecessor of the 777 and the next generation of 737. The two crashes are related‚ and both have a common cause: the computerized flight-control system. The wing's pilot's position was critical. If the aircraft was properly positioned‚ the pilot would have experienced little or no problems in the air.
Terrible news about the China Eastern Airlines flight MU5735. My thoughts are with the families of all those caught up in this tragedy and the search and rescue teams currently responding. — Boris Johnson (@BorisJohnson) March 21, 2022
Our thoughts are with the passengers and crew of China Eastern Airlines Flight MU 5735. We are working with our airline customer and are ready to support them. — The Boeing Company (@Boeing) March 21, 2022