Boeing Co (NYSE:BA, ETR:BCO) shares fell more than 8% Monday after the Federal Aviation Administration ordered the grounding of all 737 Max 9 planes.
On Friday, a panel blew out of an Alaska Air Group (NYSE:ALK) aircraft’s fuselage, requiring the plane to make an emergency landing. Shares of Alaska Airlines are down 2.7%.
As a result of the groundings, hundreds of flights have been canceled on Monday, including 220 United Airlines and 140 Alaska Airlines flights, according to data from FlightAware.
This deals a blow to Boeing's already imperfect reputation, according to analysts at Bank of America.
"We do see the latest incident as eroding the fragile confidence that has been built around the 737 MAX franchise," the analysts wrote in a note to clients. "In our view, Boeing needs to tread carefully and cautiously through this potential reputational minefield. Some scrutiny must be saved for regulators as well, as the FAA is ultimately responsible for certificating these aircraft before delivery."
"That said, at this point in time, due to the duopoly nature of the industry, we do not see this impacting orders for any of the 737 MAX variants."
For that reason, BofA maintained its Buy rating and $275 price target for Boeing. Shares of the company closed Monday at $229.
A large chunk of the cancelations have affected Seattle-Tacoma International Airport, which serves as a hub for Alaska Airlines.
Cancelations are expected to continue throughout the week, according to a statement from Alaska Airlines on Sunday. The airline canceled 170 flights Sunday affecting about 25,000 passengers.