Today, shares of Boeing (NYSE:BA) are down more than 7% after one of the company’s planes crashed in China. The plane, a six-year-old Boeing 737-800, was scheduled to fly with 132 people on board from Kunming to Guangzhou. China Eastern Airlines (NYSE:CEA) was the airline operating the flight.
According to Flightradar24, the crash began at 2:20 P.M. local time when the 737-800 quickly lost altitude from 29,100 feet. The cause of the crash and the number of casualties is not yet known. However, Chinese local media reported that rescue workers had not yet found any signs of survivors. Boeing is actively working to collect more details on the tragedy.
Here’s what you should know about the news and BA stock.
Why Is BA Stock Down Today?
The 737 is a single-aisle plane and one of the most-used options for short and medium-distance rides. China Eastern operates “multiple versions” of the plane, including the 737 Max and its “predecessor,” the 737-800. Globally, there are about 4,200 Boeing 737-800 planes in service; Chinese airlines operate 1,177 of them.
Of course, the 737 Max has made numerous headlines in the past few years, but not for good reason. In 2018 and 2019, the Max experienced two crashes within five months of each other, resulting in a combined 346 deaths. The cause of the crashes was partly attributed to the plane’s flight-control system. After the second crash, the 737 Max was grounded worldwide.
Last December, Chinese regulators stated that the Max could resume flying after airlines addressed a list of fixes. However, the planes are still grounded in China. It is not yet known whether the nation will ground the 737-800 after today’s crash.
What’s Next for Boeing?
This 737-800 crash comes at a time when the Max was expected to resume flying in China. This month, flight tracking websites showed that a 737 Max was en route to a completion plant in China. The plane was painted in the colors of Shanghai Airlines, which is a subsidiary of China Eastern. An analyst from Jefferies added:
“If this points to a delivery, it will be the first MAX delivery to China since March 2019, which is material as the country historically has represented 17% of deliveries.”
Today’s crash in mind, however, it seems possible that China will decide to ground the 737 Max for even longer. If so, Boeing may take a major hit on revenue. BA stock could also suffer further. Finally, other countries may choose to ground the 737-800 as well.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
