Stephen Brashear
A weekend plane accident that could have ended in tragedy continues to make waves, putting a spotlight on the aerospace industry and what it might mean for one of America's leading exporters. A so-called door plug on Alaska Airlines (NYSE:ALK) Flight 1282 blew out on Friday evening, causing the cabin aboard the Boeing (NYSE:BA) 737 Max 9 to rapidly depressurize only 6 minutes after it departed from the Portland International Airport. Luckily, the jetliner was cruising at an altitude of 16,000 feet at the time of the incident, and no one was sitting in the two seats next to the affected area, though things could have ended a lot differently if the plane had been flying much higher.
Clues: A probe is underway to examine the door plug, a panel where an optional emergency exit can be placed in the event a plane is manufactured with a high capacity seating configuration. All of Alaska Airlines' (ALK) aircraft are permanently "plugged," leading many to speculate that something may have been wrong with the installation of bolts or the pressurization system aboard the plane. In response to the accident, the FAA temporarily grounded 171 Boeing (BA) 737 Max 9 planes worldwide, requiring fresh inspections and safety checks before the plane variant returns to service. The missing door plug was also located in the backyard of a Portland, Oregon-area resident.
It's bad news for Boeing (BA) shareholders as the stock opened the premarket session on Monday down 8.4% to $228. Aerospace supplier Spirit AeroSystems (NYSE:SPR), which manufactures and installs the door plugs in question, also tumbled 16.5% in early trade to $26.50/share, with both companies involved in the complex, two-tier installation process. SA Investing Group Leader Dhierin Bechai believes the latest investigation will solely focus on the 737 MAX 9 (with deactivated doors) of which Boeing has around 300 in backlog by November 2023 and over 200 airplanes delivered.
Outlook: The entire situation could not have come at a worse time for Boeing (BA). The stock was just recovering from lows last seen during COVID as the U.S. planemaker attempted to ramp up output and take back the delivery crown from Airbus (OTCPK:EADSY). It's French rival has held the top spot ever since the grounding of the Boeing (BA) 737 MAX in 2018, which was in response to two jetliner crashes that had killed 346 people. Since then, it has been hard for Boeing (BA) to shake off financial and reputational damage, and the latest episode will likely put the company back in the crosshairs of regulators.