Boeing (BA) is in a bad way on Monday morning after its second deadly crash in less than six months.
The share reaction comes after a tragic indecent on Sunday in which a 737 MAX 8 plane en route from Addis Ababa to Nairobi crashed shortly after takeoff and killed all 157 passengers aboard the flight.
The incident is reminiscent of an even more-deadly crash that took place in Indonesia during a Lion Air Flight from Jakarta to Pangkai Pinang. In that incident, an investigation found anomalies with the instruments in the plane and found the 737 MAX 8 model involved "not airworthy."
Additionally, pilots were reportedly not told about new features that pointed the "angle of attack", or direction of the plane's nose, downward due to changes in the plane's center of gravity from prior models.
The issue prompted Indonesia to consider cancellations of its 190 orders for the plane worth a whopping $22 billion. As the 737 MAX plane currently has 4,661 unfulfilled orders across global airlines, widespread cancellations could represent hundreds of billions of dollars to Boeing and wipe out the majority of its much-touted backlog.
So far, the second incident in Ethiopia has prompted a halt to service of the popular 737 MAX aircraft in China, Indonesia, Mongolia, Ethiopia, Morocco and the Cayman Islands thus far. India and Vietnam, also major markets for the backlogged orders, are reviewing the situation, while operators and regulators across the globe consider their own actions. In Vietnam, the Civil Aviation Authority stated that it will not license use of the MAX aircraft until the results of investigations and remedial measures had been reviewed.
The investigation by Vietnamese officials comes at a particularly inopportune time for Boeing, as the company confirmed an agreement with Vietjet to provide 100 additional 737 MAX airplanes after President Trump and Vietnamese Communist Party General Secretary Nguyen Phu Trong met in late February to further economic ties. The orders were estimated to be worth $12.7 billion, according to a Boeing statement, but are now in jeopardy.
Which airlines have purchased the 737 Max? Your questions, answered
"Southwest said it's confident in the safety of its fleet, including the Max, and American said it will keep a close watch on the Ethiopian probe" https://t.co/DjXKzkrZot via @business pic.twitter.com/qyz5FtPHaS— Tara Lachapelle (@taralach) March 11, 2019
Domestically, former U.S. Department of Transportation Inspector General Mary Schiavo said that all 737 MAX planes should be grounded "as a matter of common sense."
The US should ground all Boeing 737 MAX 8 planes, "just as a matter of common sense," says @MarySchiavo after Sunday's crash.March 11, 2019
Southwest has indicated that while it is in conversation with Boeing about the issues concerning the aircraft, it has declined to down the aircraft at this time. Shares of the airline are falling sharply in pre-market trading alongside Boeing.
Shares of the Chicago-based aircraft manufacturer are set for their lowest open since January -- after the incident and subsequent reaction.
The manufacturer has responded with condolences to the families and a promise to investigate the incident.
"Boeing is deeply saddened to learn of the passing of the passengers and crew on Ethiopian Airlines Flight 302, a 737 MAX 8 airplane. We extend our heartfelt sympathies to the families and loved ones of the passengers and crew on board and stand ready to support the Ethiopian Airlines team," the statement reads. "A Boeing technical team will be travelling to the crash site to provide technical assistance under the direction of the Ethiopia Accident Investigation Bureau and U.S. National Transportation Safety Board."
For now, the response appears to be cold comfort to the families of the deceased and, much less importantly, shareholders of the company.
Many will await the report from the black box that was recovered in early morning hours on Monday.
Accident Bulletin no. 6— Ethiopian Airlines (@flyethiopian) March 11, 2019
Issued on March 11, 2019 at 01:40 PM Local Time
The Digital Flight Data Recorder(DFDR) and Cockpit Voice Recorder(CVR) of ET302 have been Recovered.