Why Boeing Stock Is Crashing
- Boeing is racing to get its 737 MAX 10 certification before the end of the year to avoid being subject to different guidelines.
- According to Reuters, a Boeing executive stated that the firm will not complete the MAX 10 certification until 2023.
- Boeing still has the potential to convince US legislators to extend the deadline.
What’s going on with Boeing stock?
Boeing stock is crashing with news that the company has apparently given up on the hope that regulators will approve the MAX 10 version of its critically important 737 for commercial service before the end of 2022. This would have a devastating impact on the company’s efforts to get the jets to customers. As a result, Boeing (NYSE:BA) shares were down more than 5.55% by the market close on Thursday.
Why we care
Although the Boeing 737 MAX was once predicted to be the most popular plane in aviation history at the time, it has not lived up to its potential. The aircraft was grounded worldwide after two fatal crashes in March 2019 and December 2020. There has also been intense scrutiny of Boeing’s regulatory system.
Boeing continues to face new regulations, even though the MAX is now flying again. In addition, all new models and variants certified after 2022 will be subject to new cockpit alarming requirements. This is a time-consuming and costly rework for Boeing and airline customers who must train pilots to fly those jets.
Boeing is racing to get certification for the MAX 7 and MAX 10 models as soon as possible. John Dyson, a Boeing marketing specialist, told Reuters that the company hopes to obtain certification for the MAX 7 within the deadline. However, regulators will not grant approval for the MAX 10 until the first half of 2023.
Boeing argued that even though the 737 MAX versions differ in size, they are still the same plane and should be subject to the same regulations. Airlines would likely prefer this so they can reduce training costs. Dyson stated that Boeing is currently discussing a possible deadline extension with US lawmakers.
This argument is likely to be persuasive at Capitol Hill. As a result, an extension allowing MAX 10 certification under the old rules remains possible. Boeing would welcome an extension, as it is trying to move as many metals as possible. Furthermore, the firm’s goal is to generate cash and reduce some of the debts that it took on during the pandemic.
For now, however, we are left with uncertainty. Investors concerned about the possibility of a recession affecting travel demand and demand for new aircraft were sent lower by the bad news regarding the MAX 10.