Shares of Boeing are lower after the China Eastern plane crash.

The crash of a Boeing airliner in China on Monday follows years of upheaval for the American manufacturer, raising the prospect of renewed regulatory scrutiny and sending its stock sharply lower.

Boeing shares were off 4 percent in afternoon trading on Wall Street, hours after a Boeing 737-800 NG operated by China Eastern plunged from the sky on a domestic flight with more than 130 people aboard. China Eastern shares ended Monday 6.5 percent lower in trading in Hong Kong.

There is no clear indication as to the cause of the crash, and accident investigations can go on for months, even years, before an official determination is made. But the answer will carry significant weight for Boeing, which has faced recent trouble with two flagship planes: the single-aisle 737 Max and the twin-aisle 787 Dreamliner.

“I think it’s going to be very important to see what actually happened with this particular incident because there’s a credibility concern,” said Rob Spingarn, managing director at Melius Research, a financial analysis firm. “I think the investment community will pause to some extent on Boeing until that information is out.”

An industrial icon, Boeing is the largest manufacturing exporter in the United States, one of the federal government’s biggest contractors, a blue chip stock and a major employer whose fortunes help shape the U.S. economy.

The Max, the latest generation of Boeing’s flagship 737 aircraft family, was banned from flying globally in March 2019 after two fatal crashes in which 346 people were killed. The United States approved the plane for flight again in late 2020, spurring similar approval from other countries around the world.

But there has been an important holdout: China, which had been expected to clear the plane to resume flying in the coming months. The fate of that approval may now be intertwined with the investigation into the crash involving the 737-800 NG, industry analysts said. Chinese government officials may feel uncomfortable approving the Max while they are investigating a crash involving its predecessor, the analysts said.

Those crashes were directly tied to MCAS, a system that was introduced with the Max.

On Monday, Boeing said that it was in touch with China Eastern Airlines and with the U.S. National Transportation Safety Board, the agency that will take the lead should China ask for U.S. assistance.

Boeing also said that its “technical experts are prepared to assist with the investigation led by the Civil Aviation Administration of China.” The U.S. Federal Aviation Administration also said that it “is ready to assist” in an investigation if asked.

Leave a Reply

Your email address will not be published.

Back to top button