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

Investing.com -- Several Wall Street analysts weighed in on Boeing Co (NYSE:BA) after today’s deadly Air India crash that killed 241 passengers and crew, with one person miraculously walking away. The flight, headed to London’s Gatwick Airport, crashed in Ahmedabad in western India shortly after take-off on Thursday.

787-8 Dreamliner

The plane that crashed was a Boeing 787-8 Dreamliner, it had been in service since 2014. Multiple analysts noted that the plane has a “very good” track record, with this being the first fatal crash. However, the 787 experienced several battery-related incidents soon after entering service in 2011.

“The crash represents the first fatal accident involving a 787 since the type entered service in September 2011,” Jefferies analyst Sheila Kahyaoglu stated.

“… we would note that the 787 has a very strong safety record,” RBC Capital’s Ken Herbert added.

What caused the crash

Video of the crash shows the aircraft struggling to gain altitude before quickly descending and crashing.

"Initial ADS-B data from flight #AI171 shows that the aircraft reached a maximum barometric altitude of 625 feet (airport altitude is about 200 feet) and then it started to descend with an vertical speed of -475 feet per minute," Flightradar24 said in a post on X.

“The flight path after takeoff shows a slow rate of climb, before a rapid descent, suggesting a loss of power on takeoff, which would most likely be traced to the engines,” Bernstein’s Douglas Harned commented.

Harned further notes that commentary by aviation experts has focused on engine failure, with a multiple bird strike situation as a possibility. The plane was equipped with The GEnx engines and GE Aerospace is reportedly sending a team to the site for the investigation.

The analyst added that maintenance performance is always a possibility in situations like this - airframe or engine.

Boeing stock

Analysts note that Boeing is still in the penalty box, given its past incidents. Shares closed down 4.8% today.

“… after the Boeing MAX crashes in 2018-2019, it is understandable that investors will take a cautious view on the stock, even though the implications of the crash are not known at this time,” Herbert commented. “However, we would comment that after several of the more recent air crashes or incidents involving Boeing aircraft, the stock has been down an average of (5%) on that day, and then down an average of (6%) one week after the accident. We looked at the two MAX crashes, as well as two 787 battery fires, and the MAX door-plug incident in calculating these returns.”

“Considering the long safety record of the 787 aircraft, investors view the market pullback of Boeing’s stock as overdone as the 737 MAX production rates improve,” Morgan Stanley’s Kristine Liwag stated.

Paris Airshow overhang

With the Paris Airshow set to kick off next week, the tragedy is a major overhang on Boeing, with some questioning if the company will still attend the event.

“It can often take months to fully understand the causes of a crash, and the implications for Boeing and its suppliers,” Herbert stated. “However, the crash will likely impact sentiment on the stock in the near term, and will likely limit near-term upside associated with the historical OEM stock outperformance the week of the airshow. We would caution investors to not rush to judgment on the causes of the crash, but can appreciate the uncertainty now on the stock will be an overhang, and could linger for an extended period of time.”

Other companies with potential exposure

GE Aerospace (NYSE:GE) (engines), RTX Corp (NYSE:RTX) (avionics, interiors and systems), Spirit Aerosystems Holdings Inc (NYSE:SPR) (fuselage sections), Howmet Aerospace Inc (NYSE:HWM) (fasteners, engine components), Hexcel Corporation (NYSE:HXL) (carbon fiber), and Ducommun Incorporated (NYSE:DCO).

This article first appeared in Investing.com