On Wednesday (12/3), the United States joined other countries by grounding Boeing 737 Max planes. Shares of Boeing (BA) fell 3% immediately after President Donald Trump announced the grounding from the White House. Although since then BA have rebounded slightly higher, the stock is still down more than 11% since the crash, wiping more than $27 billion off Boeing's market value.
The decision was made after two fatal crashes in the last five months involving the 737 Max 8 planes. One was from Lion Air flight in Indonesia in October last year and the other was from Ethiopian Airlines last Sunday (10/3). Neither of the accidents left any survivors. Investigation from both crashes suggested that the pilots struggled controlling the plane just before the collapse.
Investors and analysts are still evaluating the financial implications for Boeing stocks as the grounding could cost $1 billion a month in lost free cash flow from delivery delays. “At this time, we see the best-case scenario for (Boeing) as a six- to eight-week grounding,” said Ken Herbert, an analyst at Canaccord Genuity.
Sources:
CNN
MarketWatch