The incident involving a Boeing 737 MAX 9 that had its plug door blow off in midair over the weekend is the latest involving the 737 MAX, which plays a critical role for the company but has been hit by a number of setbacks since it was introduced as the successor to the 737 Next Generation six and a half years ago.
The latest incident saw a plug door panel, which covers an extra emergency exit that is only operable on planes with the maximum capacity, blow off an Alaska Airlines flight that was at 16,000 feet and climbing to cruising altitude after departing Portland, Oregon, for Ontario, California. The loss of the panel caused the depressurization of the cabin, and the plane returned safely to Portland with no serious injuries reported.
Alaska Airlines and United Airlines, the two U.S. air carriers that use the 737 MAX 9, grounded their fleets to inspect their aircraft while the Federal Aviation Administration (FAA) and National Transportation Safety Board carried out an investigation into the incident which resulted in hundreds of flights getting canceled. The MAX 9 involved in the incident had been restricted from long flights over water, such as to Hawaii, after Alaska reported pressurization alerts on prior flights.
The latest incident caused Boeing’s stock price to fall over 8% during Monday’s trading to a one-month low. Despite the concerns raised by the latest 737 MAX incident, the aircraft remains a central part of Boeing’s business going forward.
Sheila Kahyaoglu, a senior equity research analyst at Jefferies, said in a Monday appearance on FOX Business’s “The Claman Countdown” that her firm is maintaining its buy rating for Boeing despite the incident and outlined the importance of the 737 MAX to Boeing.
“We are sticking with our buy rating on Boeing despite the MAX incident over the weekend,” Kahyaoglu told guest host Ashley Webster. “The MAX is extremely important to Boeing and its free cash flow profile of $10 billion by 2025-2026. How important is it? Well, it contributes about 30% of revenues and each MAX Boeing delivers we estimate is about $10 million of free cash flow per aircraft to our estimate of about $3 billion in 2023 and $5 billion in 2024.”
Kahyaoglu added the MAX is “extremely important, we don’t think this will change the financial picture, we don’t think it will impact the production ramp for the time being.”
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The Boeing 737 MAX was involved in a pair of fatal crashes shortly after its introduction. A Lion Air MAX plane crashed in Indonesia in October 2018, killing all 189 people aboard. That was followed by the crash of an Ethiopian Airlines MAX that killed all 157 people on the flight.
In the wake of the crashes, the FAA and several of its international counterparts grounded the MAX to review the aircraft’s safety – moves that caused Boeing to cut its production in the spring of 2019 and post its largest-ever quarterly loss that summer.
Boeing fired several executives, including its CEO, in the wake of the crashes. After pausing production for a time in early 2020, the aircraft manufacturer resumed low-rate production and regulatory testing of a redesigned plane. An investigation by the House of Representatives found that Boeing failed in its design and development of the MAX and wasn’t transparent with the FAA, while the FAA failed in its oversight and certification procedures.
ALASKA, UNITED CANCEL FLIGHTS FOR BOEING 737 MAX 9 INSPECTIONS
In November 2020, the FAA lifted its grounding order for the 737 MAX and allowed it to resume flying and, one month later, Congress passed legislation reforming the FAA’s certification process for new airplanes – including increased disclosures from manufacturers to the FAA about safety information. The EU allowed the 737 MAX to return to service in January 2021.
Boeing had to halt 737 MAX deliveries in April 2021 after electrical problems caused part of its fleet to be re-grounded. Deliveries of some 737 MAXs were paused in April 2023 to deal with a new supplier quality issue involving non-compliant fittings, and in July, its first delivery of the 737 MAX 7 was delayed to 2024.
In August 2024, Boeing identified a new supplier quality problem involving improperly drilled holes on the aft pressure bulkhead.
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In late December 2023, before the latest incident, Boeing and the FAA sent a warning to 737 MAX operators to inspect their aircraft for a loose bolt that could impact its rudder control system.
During their inspection of grounded 737 MAX 9s, United Airlines reported finding loose bolts on some of its aircraft.
Reuters contributed to this report.