Boeing (BA) stock tumbled on Monday, falling more than 8% in morning trading after the Federal Aviation Administration ordered the temporary grounding of some Boeing 737 Max 9 jets.
The planes under question are fitted with a door plug that flew off an Alaskan Airlines plane midair on Friday. The order from the FAA will impact 171 planes.
Friday’s incident isn’t the first time the 737 Max has been under scrutiny. Two fatal crashes in 2018 and 2019 that together killed all 346 passengers and crew on board led to a 20-month grounding of planes as safety changes were made.
Shares of Spirit AeroSystems (SPR), which makes the fuselage for Boeing’s 737 Max jets, also tanked on the news, falling more than 13% at the open.
Still, some Wall Street analysts believe the event last week won’t have a long-term negative impact on the stock.
“This accident does not alter our positive view on [Boeing],” RBC Capital Markets analyst Ken Herbert wrote in a note to clients. “We think investing in BA requires thick skin, and headline risk is substantial, but initial indications are that this is an isolated incident, and the financial risk to the MAX is not thesis changing.”
Boeing stock had been up more than 20% over the last year prior to Monday’s drop.
“Our view remains that Boeing’s key task over the next two years is to ramp production and deliveries of 737s and 787s,” JPMorgan analyst Seth Seifman wrote in a note to clients. “Friday’s 737 MAX 9 accident is obviously not helpful in this regard but the extent of the setback is not yet clear, with a range of potential outcomes.”
Seifman notes that a key issue moving forward will be how regulators address the incident and the timeline on when all planes can return to service.
The FAA said it issued its directive because it expects that the condition that led to the failure of the door plug on Flight 1282 also exists on other Max 9 aircraft. The agency noted in a statement that it “has determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.”
Citing an ongoing investigation by the National Transportation Safety Board (NTSB), Boeing declined to comment on whether or not the company ran into questions about the integrity of the door plug during the design or manufacturing process for the Max 9.
Door plugs exist on some of Boeing’s predecessor generation of 737 aircraft. The plug concept is not unique to Boeing and is used by other manufacturers, including Airbus.
Josh Schafer is a reporter for Yahoo Finance.
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