Here’s Why Boeing Stock Just Fell As Much As 6%

TradingKey - The aerospace industry is notoriously difficult to enter. In fact, the current ecosystem contains just two aircraft manufacturers; American firm Boeing Co (NYSE: BA) and its European competitor Airbus SE (PA: AIR).

This duopoly has functioned without much competition for many years. But right now, one of the big two is faltering and that’s Boeing. Safety, when it comes to aircraft of any kind, is paramount. And there are potential questions being raised about one of Boeing’s models after a fatal crash of a Jeju Air plane in South Korea in recent days.

In response to these worries, Boeing’s shares fell as much as 5.8% in early trading on Monday (30 December) before recovering some of those losses to close down 2.3%. Here’s what investors need to know about the latest concerns surrounding Boeing.

What happened with Boeing?

The worries go back a while with Boeing’s safety record and the company has had an absolutely horrible 2024, with its shares down nearly 30% for the year. Investors may remember that Boeing had its Boeing 737 MAX plane grounded for around 18 months in 2019 after it came to light that the plane’s software was faulty. This had directly resulted in two fatal crashes.

The latest air disaster took place in Korea, where a Jeju Air flight carrying 181 people crashed upon landing with 179 people killed. In terms of the plane model, it was a Boeing 737-800 jet, not the 737 MAX, and had been manufactured back in 2009.

Jeju Air states that it started flying the plane in 2017 and, in a news release, said that the regular inspections had been completed before takeoff of the flight from Bangkok. 

At this point in time, it’s not 100% clear what the exact cause of the crash was but most data points suggest that a “bird strike” – a collision between birds and a plane – resulted in an emergency landing that went wrong.

Other reasons to worry for Boeing shareholders?

So far, most of the negative press surrounding Boeing has focused on the company’s major issues with its supply chain. This has seen the company consistently push back delivery dates on planes that had been ordered by major airlines. That is giving its European peer, Airbus, an opportunity to grab market share from the American giant.

Boeing also saw its workforce go on strike in the second half of this year and the strike lasted 53 days before workers accepted new contract terms from the company, which included a 38% pay increase over four years. 

In terms of estimated losses from the strike, Boeing puts the number at over US$9 billion in terms of lost revenue for itself and its suppliers.

Safety and efficiency in focus in 2025

Overall, the latest air disaster in South Korea doesn’t – at this moment – appear to be down to any structural deficiency with the Boeing plane. Indeed, more recent air disasters that have involved Boeing planes – including a China Eastern Airlines 737-800 plane that crashed in March 2022 – have been attributed to other causes.

The company is set to report its Q4 2024 earnings in late January/early February and investors will be focused on the immediate impact of the strike as well as the outlook for the delivery of new planes and whether the company can clear the backlog – which is a sizeable 5,400 aeroplanes worth US$428 billion as of the end of Q3 2024.

For investors, focusing on the fundamentals of the business, while ensuring that Boeing’s focus on safety isn’t compromised, will be key aspects to watch in 2025.