Further issues with Boeing Co (NYSE:BA, ETR:BCO)'s 737 Max jets have hit industry members on Monday after a blow-out on one of the jets in America late last week.
Speculation has built over how far-reaching issues could be following the failure of a door plug on the Alaska Air Group (NYSE:ALK)-operated 737 Max 9 on Friday, with the reopening of markets after the weekend proving tough for Boeing and its suppliers.
Shares in Boeing slipped 8% as investors fled on a new bout of uncertainty relating to the Max, while those in suppliers Spirit Aerosystems and Senior PLC (LSE:SNR) also fell 13% and 3% respectively.
Indeed, “the failed plug in the unused emergency exit door is either a Spirit fuselage product or an issue in the Boeing quality control process”, Peel Hunt analysts noted.
Monday marked a different story for Airbus Group (EPA:AIR) and those associated with the European-based manufacturer meanwhile, as shares in the Boeing rival climbed 2.6%.
Discussing the upside for Airbus, AJ Bell analyst Russ Mould said: “Investors are betting it could take even more market share from Boeing”, following the incident.
Given the issue follows the grounding of the Max in 2019 on the back of two crashes, Mould suggested Boeing was once again looking at a long-term hit.
“Boeing’s management will be under considerable pressure from the regulators and customers to explain what’s going on, which means considerable headwinds ahead for the business.”
Peel Hunt argued the effects may not be as bad for Boeing as from previous issues with its Max, but said plans to ramp up production were now in doubt.
Discussing supplier Melrose Industries PLC (LSE:MRO, OTC:MLSPF), which has an order for components of Max engines, Peel Hunt said backlash should be very limited, with its stronger ties to Airbus telling on Monday as the stock jumped over 4%.
Groundings of Max 9 jets have already been ordered by the Federal Aviation Authority in the US, though these are expected to be largely limited given the particular set-up of the aircraft linked to Friday’s incident is not widely operated elsewhere.
According to the European Union Aviation Safety Agency, no EU-based carrier operates B737 Max 9 aircraft in the same configuration as that involved in the incident.
In the case of the Alaska Air aircraft, a door plug - sitting in the place of an unneeded exit - fell off mid-flight.
“The 737-9 aircraft operating in Europe do not have this configuration,” the regulator said, which “is typically adopted by airlines flying lower-density operations where this additional exit is not required”.
UK regulator the Civil Aviation Authority has written to carriers to say the Max 9 variant should not be flown in domestic airspace following the incident, meanwhile.