Boeing 737 Crash Real Test For Investor Confidence

The crash of a Boeing jet in China sent the company’s shares down 5.6% at one point Monday, signaling a test of investor confidence just as the plane maker was starting to put a number of crises in its past.

A Boeing 737-800 plane carrying 132 people for China Eastern Airlines crashed in the mountains of southern China’s Guangxi region on Monday. Details about the crash in China are pending, but analysts say they’d be surprised if it was the result of a fault with Boeing’s aircraft.

The 737-800 has one of the best safety records for any plane, according to aviation consultancy Cirium. It precedes the 737 Max, which experienced an extended grounding following multiple fatal crashes that exposed deception in the aircraft’s development.

Given the excellent long-term safety record, markets would be surprised if this crash is determined to be caused by a design or manufacturing defect. Operator or maintenance issues are typically far more likely in situations like this, which suggests there will not be any long-term impact to Boeing from the crash.

Until what exactly happened is revealed, sentiment materially will worsen for Boeing shares. Boeing is in contact with the US National Transportation Safety Board and technical experts are prepared to assist with the investigation led by the Civil Aviation Administration of China.

Whether China retaliates against Boeing. China has a vested interest in bolstering its own narrow-body plane, the Comac C919, a competitor for the 737-MAX, which is still awaiting recertification in China.



All of China Eastern’s 737-800 planes were ordered grounded following the Monday crash, Chinese state media reported.

Any excuse to further delay the MAX could be opportunistically used by the Chinese regulator. China likely would not admit this is what they’re doing. But it could happen.

Boeing has come a long way from the safety crisis that erupted surrounding the 737 Max and the financial crisis stemming from the early months of the pandemic. But a tussle with China could regenerate problems at a time when the company was hoping for brighter days.