Boeing (BA, Financial) has seen its shares plummet by approximately 26% in 2024, with recent developments adding to the aerospace giant's woes. The company is currently under the scrutiny of the Department of Justice (DoJ) following a series of negative incidents, including a door plug blowout on an Alaska Air (ALK, Financial) flight on January 5, 2023, which is now subject to a criminal investigation.
Adding to Boeing's troubles, a Boeing 787 operated by Latam Airlines from Sydney to Auckland experienced a severe "technical event" that caused about 50 passengers to sustain injuries. This incident, although involving a different model than the controversial 737 MAX, raises further concerns about Boeing's quality control measures. These issues trace back to the fatal crashes in 2018 and 2019, which were linked to the Maneuvering Characteristics Augmentation System (MCAS) and led to a $2.5 billion settlement in 2021.
The DoJ is also investigating whether Boeing has adhered to the terms of the 2021 settlement related to the 737 MAX crashes. Any findings of non-compliance could lead to charges of defrauding the U.S. government. Moreover, Boeing may face additional regulatory scrutiny and potential production delays for the 737 MAX, which could impact the company's recovery efforts.
Despite these challenges, Boeing reported a smaller-than-expected net loss in its Q4 earnings, with a 13% increase in revenue from its Commercial Airplanes segment. The company has refrained from providing future guidance due to the uncertainties surrounding the 737 MAX. However, the demand for new aircraft remains strong among airlines looking to expand their fleets amidst robust travel demand. Boeing's ability to resolve its quality control issues and restore confidence will be crucial for its future success, especially as it faces competition from Airbus (EADSY, Financial), which stands to benefit from Boeing's current predicament.
