Investor Essentials Daily

Boeing is in trouble, again…

February 27, 2024

Boeing is under pressure due to a safety concern after a door plug detached from a 737 Max jet operated by Alaska Airlines, causing renewed scrutiny over the Federal Aviation Administration’s (“FAA”) oversight and the aircraft’s safety.

This model had previously been grounded after two fatal crashes in 2019, linked to a faulty automated system, but had returned to service with modifications.

The recent incident, which resulted in no injuries but led to a drop in cabin pressure, has reignited debates about the 737 Max’s safety and the FAA’s regulatory effectiveness.

Boeing’s stock has fallen nearly 19% since the start of 2024, yet investor confidence suggests optimism for the company’s recovery.

Boeing is investigating the incident with Alaska Airlines and emphasizes its commitment to safety, amidst concerns about its reputation and long-term performance.

Investor Essentials Daily:
Tuesday News-based Update
Powered by Valens Research

Boeing (BA), one of the world’s largest aircraft manufacturers, is once again under pressure for safety concerns after a door plug detached from a 737 Max jetliner operated by Alaska Airlines.

This incident has raised questions about the FAA oversight of Boeing and its decision to allow the 737 Max to return to service without additional modifications.

The 737 Max has been at the center of controversy since two fatal crashes in 2019, which resulted in the grounding of the entire fleet.

The crashes were attributed to a faulty automated system that caused the planes to nosedive. Boeing has since made changes to the system and implemented additional safety measures to address the issue.

However, the recent incident involving the door plug has once again raised concerns about the safety of the 737 Max.

The plug, which covers a hole in the fuselage, detached during a flight, causing a loud noise and a drop in cabin pressure. The flight crew was able to safely land the plane, and no injuries were reported.

The FAA has come under criticism for its handling of the situation.

Critics argue that the agency has not done enough to hold Boeing accountable for the safety issues with the 737 Max. The FAA allowed the plane to return to service without requiring additional modifications beyond those already mandated, which some believe could have contributed to the recent incident.

Boeing has stated that it is working with Alaska Airlines to investigate the incident and determine the cause of the door plug detachment.

The company has also reiterated its commitment to safety and stated that it will take any necessary actions to address the issue.

These unfortunate events are also being reflected in the company’s stock. Boeing fell almost 19% since the start of 2024.

Despite the safety concerns, the markets appear optimistic about Boeing’s future recovery.

Investors seem confident that the company will be able to overcome its challenges and regain its position as one of the leading aviation manufacturers globally.

However, it remains to be seen how the latest controversy may affect Boeing’s reputation and long-term performance.

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

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