Airline stocks pare early losses after second deadly crash involving Boeing’s 737 Max

Airline stocks pared their early losses Monday, as Boeing Co. shares rebounded from their worst levels, after a deadly crash involving the aerospace giant’s 737 Max 8 aircraft in Ethiopia, the second fatal accident involving the aircraft in six months.

Boeing shares BA, -7.11% slid more than 11% premarket but were down about 6.9% in official trade, on the news that the aircraft operated by Ethiopian Airlines crashed shortly after taking off from the capital of Addis Ababa, killing all 157 people on board. In October, the same plane, operated by Indonesia Lion Air, crashed into the sea, killing all 189 passengers on board. China’s civilian aviation authority has ordered all airlines to ground Max 8 planes, while Ethiopian Airlines has grounded its entire fleet of the model.

“It may take weeks for an initial report on the causes of the Ethiopian crash, so we are reluctant to draw conclusions about the possible impact,” wrote JPMorgan analyst Seth Seifman in an early note to clients. “We detected no additional disclosures in Boeing’s 10-K resulting from the Lion crash.”

UBS analysts agreed it was too soon to draw conclusions, but said the similarities between the two crashes were “hard to ignore.” In both cases, pilots requested approval to return to their departure airport within minutes of takeoff, analysts led by Myles Walton wrote in a note.

Walton noted that the Maneuvering Characteristics Augmentation System (MCAS) in the 737 Max, a safety feature that is supposed to activate at high angles of attack, was the key focus in the Lion Air crash. That led to an Airworthiness Directive that called specific attention to the system, he wrote.

“The MCAS system doesn’t activate until the flaps used for takeoff are retracted, so in the case of Lion Air, for example, issues seemed to

Read More Here...

Bookmark the permalink.