Planemaker Boeing’s stock has taken another tumble after Wall Street analysts downgraded the company’s shares in the wake of the door plug of an Alaska Airlines-operated flight blowing off shortly after take-off earlier this month.
Wells Fargo analyst Matthew Akers downgraded shares of Boeing to Hold from Buy in a report entitled “FAA audit opens up a whole new can of worms,” published on Jan. 16.
Mr. Akers shared his skepticism that Boeing would receive a “clean” audit from the Federal Aviation Administration (FAA), noting that the company is at risk of significant production and delivery delays.
“Boeing has struggled with quality issues for some time, [the] FAA’s audit is limited to MAX 9 for now, but it’s feasible that findings could expand the scope to other MAX models sharing common parts,” he wrote. “Given Boeing’s recent track record, and greater incentive for FAA to find problems, we think the odds of a clean audit are low.”
The Wells Fargo analyst’s price target went to $225 a share from $280.
Boeing stock slid down 8 percent following the report, just shy of the nearly 10 percent decline it saw in the wake of the Alaska Airlines-operated flight incident earlier this month.
The downgrade comes after the door plug fell off Alaska Airlines Flight 1282 on Jan. 5 while it was en route to California from Portland International Airport in Oregon, prompting an emergency landing back in Portland.
FAA Grounds Boeing 737 MAX 9 Aircraft
The door plug—a two-by-four-foot (61-by-122-centimeter) panel covering an unused emergency door on the jetliner—blew out on the Boeing 737-9 MAX, at about 5:11 p.m. local time, roughly six minutes into the flight when the aircraft reached an altitude of about 16,000 feet.
It left a gaping hole in the plane and caused a rapid loss of cabin pressure while approximately 171 passengers and six crew members were on board, although none sustained serious injuries and there were no fatalities.
The plane door was later reported found in the backyard of a Portland home.
In the wake of the incident, the FAA grounded all 171 Boeing 737-9 MAX aircraft worldwide while it conducts safety inspections of the planes, with the agency extending that grounding on Jan. 12.
The agency says the investigation will focus on whether Boeing “failed to ensure completed products conformed to its approved design and were in a condition for safe operation in compliance with FAA regulations.”
The agency also said last week that it is planning “new and significant actions” to immediately increase its oversight of Boeing production and manufacturing, including an audit of the Boeing 737-9 MAX production line and its supplier, increased monitoring of Boeing 737-9 MAX in-service events, and an assessment of safety risks around delegated authority and quality oversight.
Boeing Announces Independent Adviser
For its part, Boeing has acknowledged its “mistake” and vowed to remain transparent with the FAA throughout the probe. On Monday, the planemaker said it is taking “immediate actions to bolster quality assurance and controls across our factories.”
This month’s incident with the door plug is not the only one to impact Boeing. A design flaw in the 737 MAX was tied to two fatal crashes: one in Indonesia in October 2018 and the other in Ethiopia in March 2019.
Together, the two crashes just five months apart killed all 346 people aboard and prompted a 20-month grounding of the jets.
Elsewhere on Tuesday, Boeing announced an independent adviser, retired U.S. Navy Adm. Kirkland H. Donald, will lead a “comprehensive” review of the company’s quality control.
In a press release, Boeing said Mr. Donald and a team of outside experts will “conduct a thorough assessment of Boeing’s quality management system for commercial airplanes, including quality programs and practices in Boeing manufacturing facilities and its oversight of commercial supplier quality.”
“Admiral Donald is a recognized leader in ensuring the integrity of some of the most complex and consequential safety and quality systems in the world,” said Boeing President and CEO Dave Calhoun.
“I’ve asked him to provide an independent and comprehensive assessment with actionable recommendations for strengthening our oversight of quality in our own factories and throughout our extended commercial airplane production system. He and his team will have any and all support he needs from me and from across The Boeing Company.” Mr. Calhoun concluded.
From The Epoch Times
