KEY TAKEAWAYS
- Boeing shares tumbled after the Federal Aviation Administration (FAA) barred Boeing from expanding production of its 737 Max jets, including the Max 9 model.
- The U.S. aviation regulator grounded 171 Boeing planes after an Alaska Airlines Max 9 lost a panel mid-flight.
- The FAA also cleared grounded 737 Max 9 jets for flying again once inspections are complete.
Boeing (BA) shares fell 4.6% in early trading Thursday after the Federal Aviation Administration (FAA) barred the aircraft maker from expanding production of its 737 Max jets, including the Max 9 model involved in a mid-flight failure early this month.
However, the regulator agreed to allow grounded 737 Max 9 jets to resume flying once inspections are completed. The U.S. aviation regulator had grounded 171 Boeing planes after an Alaska Airlines (ALK) Max 9 lost a panel mid-flight, forcing an emergency landing early this month.
The cap on Max jet production could hamper Boeing’s growth plans, especially as competition with Airbus SE increases.
First China Delivery Since 2019
Just a few hours before the FAA announcement, Boeing also reportedly delivered its first 737 Max to a Chinese airline since 2019. China is one of the world’s fastest growing aviation markets.
Meanwhile, Alaska Airlines said Thursday that the recent grounding of Boeing aircraft would cost it $150 million this year. Alaska, which reported results Thursday, said Max 9 flights would restart as soon as Friday.
Boeing shares were 6.2% lower at $200.82 per share as of about 10:35 a.m. ET Thursday following the news, while Alaska Airlines shares were 3.3% higher and Boeing supplier Spirit AeroSystems (SPR) traded 7.4% lower. Boing shares have lost about 20% of their value so far this year.