The European aviation regulators have followed orders by the Federal Aviation Administration (FAA) for the temporary grounding of many Boeing 737 MAX-9 aircraft. This action was taken after a MAX-9 operated by Alaska Air lost a section of its fuselage in midair on Friday. Fortunately, the damaged plane was able to safely return to the Portland airport with no injuries to anyone onboard.
Inspection and Safety Measures
Both the FAA and the European Union Aviation Safety Regulator (EASA) are taking comprehensive measures to ensure the safety of these aircraft. The FAA will be inspecting all MAX-9 jets before permitting them to return to service. EASA has also adopted an Emergency Airworthiness Directive issued by the FAA for a specific configuration of the Boeing 737-9 (MAX).
Impact and Operations
It is important to note that the grounding does not affect any planes currently in operation. EU aircraft operators do not have any MAX-9 jets in their fleets. EASA has clarified that other versions of the MAX can continue to operate without any restrictions.
Understanding the Configuration
The EASA notice highlights that the specific configuration covered by the Emergency Airworthiness Directive involves replacing a mid-cabin exit with a plug-in panel. This particular MAX-9 configuration is typically adopted by airlines operating lower-density flights with lower passenger capacity, where an additional exit is not required to meet evacuation safety requirements.
The aviation industry is committed to ensuring passenger safety, and these regulatory actions highlight the diligence and proactive response to incidents like the one experienced by Alaska Air.
Boeing 737 MAX Jets and Stock Volatility
The grounding of the Boeing 737 MAX jets by the FAA has affected 171 planes. It is important to note that most of the 737 MAX jets in operation do not have the specific panel that failed on the Alaska Air jet.
According to Jefferies analyst Sheila Kahyaoglu, the MAX-9 accounted for approximately 20% of the MAX deliveries projected for 2023, but only makes up about 2% of the MAX backlog. There are approximately 220 MAX jets currently in service worldwide, with Alaska Air having completed a quarter of its inspections without any concerning findings.
To date, Boeing has delivered almost 1,400 MAX jets and has around 4,000 MAX jets in its delivery backlog. Given the ongoing issues with the MAX jets, Boeing shareholders should anticipate some stock volatility on Monday morning. The grounding of the 737 MAX jets has had a significant impact on investor sentiment.
The worldwide grounding of the 737 MAX jets lasted from March 2019 to November 2020, following two fatal crashes involving MAX-8 jets within a span of five months. These crashes were attributed to a flight-control software called the Maneuvering Characteristics Augmentation System (MCAS).
Boeing stock is currently valued at $249 per share, which is still down approximately 44% from its record high of around $446 in March 2019 prior to the grounding of the MAX jets.
Over the past 12 months, Boeing stock has seen an increase of about 17%, while shares of its rival company, Airbus, have seen a rise of about 20%. Comparatively, the Nasdaq Composite and S&P 500 indices have reported increases of approximately 37% and 21% respectively.
It is evident that the issue surrounding the Boeing 737 MAX jets has had a significant impact on both the aviation industry and the financial market.