Shares of Boeing Co (NYSE:BA) plunged anew on Tuesday amid reports that its troubled 737 Max fleet won’t be cleared to fly until June at the earliest.
Carriers looking to get their planes back in the sky in time for summer flying could take another hit as the Boeing series remains grounded.
As CNBC reported Tuesday, Boeing doesn’t expect regulatory approval of its 737 Max until June or July, which is much later than the manufacturer had anticipated. The delay puts more pressure on the company as it grapples with a worsening PR crisis and billions of dollars’ worth of lost orders.
The headache doesn’t end with Boeing; carriers have also missed out on peak travel season due to the 737 being grounded. If regulatory approval isn’t granted until summer, they may lose out on another year of peak travel business.
Boeing’s finances have deteriorated to the point where management is actively seeking bank loans of $10 billion or greater. As CNBC reports, the company has already received commitments from Citigroup, Bank of America Merrill Lynch and J.P. Morgan.
Last week, Boeing’s engineers identified more issues with the Max’s software update, complicating its timeline for regulatory approval. A spokesman for the company issued the following statement:
We are making necessary updates and working with the FAA on submission of this change, and keeping our customers and suppliers informed.
Meanwhile, Boeing’s arch-rival Airbus (EADSY) boasted of “unprecedented demand” for its A320 series aircraft. The main alternative to the Max has witnessed significant uptake since the drama involving Boeing intensified last year.
As Investor’s Business Daily reports, Airbus is planning to boost production capacity of its A321 series, a narrow-body commercial passenger plane that seats between 185 and 236 passengers.
On the receiving end of bad press, Boeing’s share price plunged by as much as 5.6% on Tuesday, sliding all the way down to $306.00. Unlike its large-cap peers, BA shares are down sharply in 2020.
Boeing’s stock rallied all the way to $342.25 on Jan. 7 before gradually declining over the next ten days. The stock is currently trading at its lowest level in over a year.
As the Dow Jones’ largest component, Boeing’s sudden price collapse had a gravitational pull on the broader index. The blue-chip Dow 30 average declined by as much as 202 points before recovering partially in afternoon trading.
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Last modified: February 3, 2020 9:31 PM UTC