Dow Scrambles After NYT Drops Brutal Boeing Bombshell

Journalist:
Josiah Wilmoth @Y3llowb1ackbird
April 22, 2019

By CCN: The Easter trading holiday failed to reinvigorate the Dow, which fell on Monday after the New York Times published a bombshell report about the index’s largest component, Boeing. However, the Dow assembled a moderate recovery on Tuesday.

Dow Eyes Tuesday Recovery After Dreary Easter Monday

As of 10:21 am ET on Tuesday, the Dow had gained 43.25 points or 0.16 percent; the DJIA last traded at 0.16 percent. The US stock market’s other major indices also rallied, with the S&P 500 rising 0.32 percent to 2,917.49 and the Nasdaq climbing 0.62 percent to 8,064.79.

The Dow rebounded on Tuesday after Easter Monday’s dismal performance. | Source: Yahoo Finance

On Monday, the Dow Jones Industrial Average endured a sharp decline at the opening bell but managed to sneak back across the 26,500 mark soon after. By the closing bell, the DJIA had lost 48.49 points or 0.18 percent to trade at 26,511.05. The S&P 500 and Nasdaq both clawed back earlier losses to post minor advances, rising 0.1 percent to 2,907.97 and 0.22 percent to 8,015.27.

New York Times Exposes Alarming Safety Concerns at Boeing Plant

On Monday morning, the Dow slipped back into decline after the New York Times published a
bombshell report about the Boeing plant in North Charleston, South Carolina, one of two facilities that manufacture the 787 Dreamliner.

According to the NYT, Boeing’s safety flubs extend far beyond the 737 MAX, which remains grounded following two fatal crashes linked to a faulty anti-stall system. At the South Carolina plant, at least, “potentially systemic problems” threaten to permanently scar the century-old aerospace giant’s stellar reputation.

Citing a treasure trove of internal documents, regulatory records, and employees, the NYT alleged that 787 Dreamliners produced at the North Charleston facility suffer from “shoddy production” standards that at times created dangerous safety hazards.

Boeing stock had already plunged 15 percent since March 1, and the NYT report doesn’t look to help the embattled aerospace giant. | Source: Yahoo Finance

Current and former employees say that Boeing leadership pressured them to prioritize production targets over safety and quality standards, causing the plant to regularly ship aircraft that had debris and other foreign objects littered among the planes’ internal components.

One American Airlines employee found a piece of Bubble Wrap near the co-pilot’s pedal and loose objects touching electrical wires that control the 787 Dreamliner’s landing gear. Boeing employees say that they once found a ladder inside a plane’s tail.

“I’ve told my wife that I never plan to fly on it,” said technician Joseph Clayton, who worked at Boeing’s North Charleston plant. “It’s just a safety issue.”

“As a quality manager at Boeing, you’re the last line of defense before a defect makes it out to the flying public,” added former quality manager John Barnett. “And I haven’t seen a plane out of Charleston yet that I’d put my name on saying it’s safe and airworthy.”

At best, employees who raised these concerns found themselves ignored. Quality managers who refused to turn a blind eye to safety hazards allege that they were reassigned or even fired on trumped-up violations.

Boeing Stock Resumes Brutal Tailspin

Boeing’s woes could extend far beyond the beleaguered 737 MAX. | Source: Shutterstock

It’s not a good look for Boeing, which already faces increased regulatory and legislative scrutiny following the 737 MAX controversy.

Boeing shares had already plunged 15 percent since the beginning of March, and this NYT report won’t do the firm any favors as it seeks to rebuild its reputation.

To make matters worse, Boeing plans to report its first-quarter earnings on April 24. Analysts warn those results might not be pretty.

Boeing stock dropped 1.29 percent to $375.17, and it dragged the Dow along with it.

BA shares dropped on Monday, setting the Dow up for a dreary day. | Source: Yahoo Finance

Last modified (UTC): April 23, 2019 10:22

Josiah Wilmoth @Y3llowb1ackbird

Josiah is the US Editor at CCN, where he focuses on financial markets. He has written over 2,000 articles since joining CCN in 2014. His work has also been featured on ZeroHedge, Yahoo Finance, and Investing.com. He lives in rural Virginia. Follow him on Twitter @y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.