Boeing Shares Dipped After Ethiopian Airlines’ 737 Max 8 Plane Crash

Boeing 737 Max
The tails of Boeing 737 MAX aircraft are seen at a Boeing production facility in Renton, Washington, U.S., March 11, 2019. (Photo: REUTERS/David Ryder)

Boeing Co. shares plummet to its lowest share price in three years after several countries like China, Indonesia, Malaysia, and Australia have grounded their 737 MAX 8 plane units. The grounding resulted from the fatal crash of Ethiopian Airlines' flight ET 302 on Sunday where 157 people have died.

The aviation disaster made airlines questioned the safety of the Boeing 737 Max 8 models so more and more airlines around the world are not flying them now. the Ethiopian Airline jet that recently crashed was the second incident involving the 737 Max and the plane was even new - only a few months old according to the airline. 

The decline of the Boeing's shares became very evident after Tuesday's late morning trade showed a sharp fall of around 7 percent which means, almost $16 billion have been cleaned from the aircraft maker's market value. This is a big turn around in its stock since the aircraft maker has been the top performer in the Dow Jones this year, Japan Times reported.

Moreover, Boeing's stock price reached $400 per share and this is the firm's biggest fall in the index, in almost two decades, effectively affecting the Dow Jones in a bad way.  It closed at the mentioned share price and this translates to a 5.3 percent drop. Other leading Wall Street brokerages have yet to take their viewpoint on the Ethiopian Airlines plane crash.

With the steep drop, CNBC news quoted Morgan Stanley analyst Rajeev Lalwani as saying, "We anticipate heightened volatility in Boeing shares. Though it is early to draw conclusions, there may be concerns of disruption around safety, production, groundings, and/or costs, all of which should be manageable longer-term."

In any case, this is the second crash involving the 737 MAX 8. Last year, Lion Air's disaster also affected Boeing's shares as it lost almost 12 percent in stock just a few weeks after the accident. The company was able to rise and eventually regained back what it lost and it was even better because the recoup almost doubled Boeing's share price. 

While more and more are halting the use of 737 Max 8 planes, with China grounding the biggest number at 100 units, it was learned that Southwest and American airlines have remained confident about the aircraft's safety. Still, they are checking out the developments in the investigation concerning the cause of the crash on Sunday morning.

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