Wall Street weighs in on Boeing after digesting deadly Air India crash

Following the fatal crash of an Air India Boeing 787-8 Dreamliner, analysts are weighing the potential impact on Boeing (BA), which closed down 4.8%. While the 787 has a strong safety record, this incident, attributed by some to potential engine failure after takeoff, creates an overhang for Boeing, especially with the Paris Airshow approaching, and may limit near-term stock upside; analysts note that Boeing's stock has historically declined following similar incidents, although some believe the pullback may be overdone given improving 737 MAX production rates.

Analysis

The fatal crash of an Air India Boeing 787-8 Dreamliner, equipped with GEnx engines, has resulted in a significant 4.8% single-day decline in Boeing's (BA) stock, reflecting heightened investor apprehension. While analysts such as RBC's Ken Herbert note the 787's historically "very strong safety record" – this being its first fatal accident since entering service in September 2011 – the incident evokes concerns related to Boeing's past issues, including the 737 MAX crashes and earlier 787 battery-related incidents. Initial ADS-B data from Flightradar24 indicated the aircraft reached a maximum barometric altitude of 625 feet before descending at a vertical speed of -475 feet per minute, supporting Bernstein's Douglas Harned's assessment of a potential loss of power on takeoff, possibly engine-related, with multiple bird strikes or maintenance performance also cited as potential factors. GE Aerospace is reportedly sending a team to the investigation site. RBC Capital highlights a historical pattern where Boeing's stock averaged a 5% decline on the day of similar incidents and a further 6% drop one week later, based on events like the MAX crashes, 787 battery fires, and the MAX door-plug incident. Conversely, Morgan Stanley's Kristine Liwag suggests the current market pullback on Boeing's stock may be "overdone," considering the 787's long safety record and improving 737 MAX production rates. Nevertheless, the crash creates a considerable overhang for Boeing, particularly with the Paris Airshow set to kick off next week, and the potentially lengthy investigation could prolong market uncertainty and limit near-term upside for the stock.

Key Decisions for Investors

• Investors should anticipate continued near-term pressure and potential further downside in Boeing (BA) shares, as historical data suggests stock weakness often persists a week post-incident, and closely monitor developments from the crash investigation, particularly regarding the GEnx engine performance and any findings related to maintenance.
• Evaluate the current BA sell-off against the 787's strong long-term safety record and improving 737 MAX production metrics, as some analysts suggest the market reaction could be excessive pending a definitive cause of the crash which may take months to determine.
• Monitor GE Aerospace (GE) for any direct repercussions from the engine investigation, and maintain awareness of potential, albeit less direct, impacts on other key suppliers such as RTX Corp (RTX), Spirit Aerosystems (SPR), Howmet Aerospace (HWM), Hexcel Corporation (HXL), and Ducommun Incorporated (DCO) as more details emerge from the investigation.