Boeing (NYSE: BA)
The recent Ethiopian crash of Boeing’s 737 Max airplane has led the company’s stock into a downfall, shedding tens of billions in market cap as countries around the world move to shut down usage of these planes. In turn, this has created a spillover effect with other major airlines who use the 737 Max, including Southwest Airlines and Air Canada, whose stock prices have been falling accordingly.
Today these stocks all fell some more as U.S. President Donald Trump joined other world leaders as he ordered all 737 Max jets to be grounded. These past few days have cost Boeing (NYSE: BA) around $33 billion in market cap from stock price losses.
The Federal Aviation Administration grounded all of these planes as it cited new evidence that showed similarities between two fatal crashes that killed 346 people in less than five months. Although the U.S. has typically stood firm behind American-made aircraft and their companies, but instead the President has joined the dozens of countries that have banned the planes altogether.
Earlier, President Trump ordered the planes to be taken out of service, a decision he cites as being made after speaking with Boeing’s CEO and Transportation Secretary Elaine Chao. “They are all in agreement with the action. Any plane currently in the air will go to its destination and thereafter be grounded until further notice,” Trump said to reporters at the White House.
“We are supporting this proactive step,” CEO Dennis Muilenburg added in a statement. “We are doing everything we can to understand the cause of the accidents in partnership with the investigators, deploy safety enhancements and help ensure this does not happen again.” Boeing has a history of paying airline companies if planes they own get grounded due to safety orders, having done so during the three-month grounding of the 787 Dreamliner jet six years ago.
Overall, shares of Boeing dropped around 11 percent before today’s announcement and dropped an extra three percent immediately following Trump’s decision from the White House – losing the company $33 billion worth in market cap. At the same time, other major airlines have taken massive hits as well. Icelandair (ICE: ICEAIR) followed closely behind Boeing, dropping almost 10 percent since the Ethiopian airlines crash. Two of Canada’s top airlines, WestJet Airlines (TSE: WJA) and Air Canada (TSE: AC), both dropped around four percent.
Curiously enough, there are some companies that have seen their stock prices increase since the accident. Netherlands-based Airbus (EPA: AIR) was the biggest winner after the disaster, gaining seven percent. This is mostly due to President Trumps earlier announcement yesterday where he ordered to cancel future orders of 737 Max jets and switching to Airbus. Asides from this, other airlines whose stock prices have increased include Aeromexico and Delta Air Lines (NYSE: DAL).
Boeing Company Profile
The Boeing Company, together with its subsidiaries, develops, produces, and markets commercial jet aircraft, as well as provides related support services to the commercial airline industry worldwide. The Company also researches, develops, produces, modifies, and supports information, space, and defense systems, including military aircraft, helicopters and space and missile systems. – Bloomberg