Beyond the Headlines: The Real Impact of Boeing's Plane Incident

Imagine this: You’re on a flight to your favorite vacation spot (Breckenridge for me), you download episodes of ‘Peaky Blinders’ to watch on the flight, you’re ready to have a nice, chill flight… Next thing you know… BOOM! The panel on the side of the airplane blows out midair. Exposing you and 220 other passengers on the flight to a 30,000-foot descent to the ground.

Well this is exactly what happened in Boeing’s recent flight.

This week, the “door plug” on a Boeing 737 Max 9 fell away during a flight from Portland, Oregon. Leaving a door-sized hole in the side of the plane.

During inspections of the airplanes, ‘loose bolts’ were found on the plug doors. This led to Boeing’s CEO hitting the ultimate “my bad”.

Luckily, no one was injured, and the flight landed safely. As for Boeing, well, they’re in the hot seat.

Grasping the true impact on Boeing

Revenue loss. The Federal Aviation Administration (FAA) grounded 171 Max 9 airplanes operated by Alaska, United, and a few other airlines.

Flight cancellations:

• United Airlines has cancelled ~228 flights

• Alaska Airlines has cancelled ~143 flights

• Copa Airlines has cancelled ~77 flights

Airlines are offering full refunds for these canceled flights. Meaning revenue is taking a hit across the aviation industry, not just Boeing.

$14 billion evaporated. At the time of writing this, Boeing has lost ~$14 billion in market capitalization.

As you can see from the chart, Boeing’s stock has taken a beating since the incident. Loss of confidence from investors is showing as shares continue to selloff.

Loss of trust. Yes, you have the loss of trust from future fliers as they look to other alternatives instead of Boeing. I know when I look for future flights, I’ll be avoiding Boeing 737s. But the real impact is the loss of trust from future partners.

When companies such as United, Alaskan Airlines, or whoever look for aircrafts to purchase in the future, do you think they are going to bring these contracts to Boeing? Maybe. But they're definitely going to consider all the alternatives.

Companies will consider alternatives such as Airbus when purchasing future aircrafts. And as you can see, Airbus shares have rallied since the incident with Boeing.