Aviation market down after Ethiopian Airlines crash: correspondent
by UNTV News | Posted on Tuesday, 12 March 2019 04:35 PM
(REUTERS) Boeing Co shares fell by the most in three years on Monday (March 11) after China, Indonesia and Ethiopia ordered airlines to ground their 737 MAX 8 planes following the second deadly crash of one of the jets in just five months.
The drop – around 7 percent in late morning trade – wiped nearly $16 billion off Boeing’s market value, marking an abrupt reversal for a stock that had been the runaway top performer this year in the Dow Jones Industrial Average.
With a stock price near $400 a share, it was by far the largest drag on the price-weighted blue chip index on Monday.
“Well the 737 is absolutely essential to Boeing it’s the backbone of the company’s cash generation and profits. And it’s also the backbone of many airlines operations around the world, you have a 737 taking off somewhere in the world every few seconds it’s absolutely essential to the future of the airline industry and the future of Boeing. And the market is down heavily today reflecting investors concerns about what this accident and the recent previous one at Lion Air means for the company and its profits,” said Tim Hepher, Reuters aviation correspondent.
An Ethiopian Airlines 737 Max 8 bound for Nairobi crashed minutes after take-off on Sunday (March 10), killing all 157 people on board.
It was the second crash of the 737 MAX, the latest version of Boeing’s workhorse narrowbody jet that first entered service in 2017.
In October 2018, a 737 MAX flown by Indonesian budget carrier Lion Air flying from Jakarta on a domestic flight crashed 13 minutes after take-off, killing all 189 passengers and crew on board.
Hepher said it was too early to say whether the accidents are related but added it would be a “very big issue for Boeing” if they are.
Boeing said on Monday that the investigation into the Ethiopian Airlines crash is in its early stages and there was no need to issue new guidance to operators of its 737 MAX 8 aircraft based on the information it has so far.
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