Boeing shares tumbled over 3% in early trading following news of an Air India Express crash that killed at least one passenger. The incident involved a Boeing 737-800 aircraft that reportedly skidded off the runway at Kozhikode International Airport during heavy rainfall, raising fresh questions about Boeing’s safety record amid its ongoing recovery from earlier crises.
The crash comes at a particularly vulnerable moment for the aerospace giant. Boeing has spent the past year working to rebuild trust after two fatal crashes of its newer 737 MAX model in 2018 and 2019 killed 346 people and led to a worldwide grounding of the aircraft. While the Air India Express plane belongs to an earlier, generally reliable generation of 737s, the timing couldn’t be worse for Boeing’s reputation.
“This creates another perception problem for Boeing, even though preliminary reports suggest weather and landing conditions were the primary factors,” said Richard Aboulafia, aviation analyst at AeroDynamic Advisory. “Investors react swiftly to aviation incidents involving Boeing aircraft given recent history, regardless of the technical distinctions between aircraft models.”
The financial impact extends beyond Boeing’s immediate stock price. The company has already absorbed over $20 billion in costs related to the MAX grounding and subsequent production issues. According to data from the Federal Aviation Administration, Boeing delivered just 20 commercial jets in July, compared to Airbus’s 47 deliveries in the same period.
Weather conditions appear to have played a significant role in the incident. Kozhikode airport sits atop a plateau with steep drops at the end of its runways, making it a challenging landing location even in good conditions. The “table-top” runway design leaves little margin for error during monsoon season landings, according to pilots familiar with the airport.
“Aviation accidents rarely have a single cause,” explained Mary Schiavo, former Inspector General of the U.S. Department of Transportation. “While it’s premature to assign blame, table-top airports combined with heavy rain create heightened risk scenarios that require precise execution from both aircraft and flight crews.”
Financial markets tend to overreact to aviation incidents, particularly when they involve manufacturers already under scrutiny. Boeing’s stock has fallen nearly 50% year-to-date, compared to the S&P 500’s modest gain, reflecting broader concerns about its financial health amid pandemic-related travel disruptions and ongoing production challenges.
The company faces a steep climb to recovery. Boeing recorded a $2.4 billion loss in its second quarter and announced plans to cut production rates across commercial aircraft lines while reducing its workforce by approximately 10%. The Federal Reserve’s latest industry analysis suggests aerospace manufacturing could face a prolonged downturn extending well into 2022.
Indian aviation authorities have launched an investigation into the crash, with international regulators likely to follow closely. The aircraft’s black boxes have reportedly been recovered, which should provide crucial data about the final moments before the accident. Boeing has offered technical assistance to investigators, a standard practice following aviation incidents.
For Boeing, the incident adds another layer of complexity to its efforts to return the 737 MAX to service. The company received encouraging news last week when the FAA outlined required changes for the MAX to fly again, but this latest crash may intensify public scrutiny of all Boeing aircraft, regardless of model.
“The distinction between the 737-800 and the MAX might be clear to industry insiders, but average travelers and some investors may not appreciate the difference,” noted Adam Pilarski, senior vice president at aviation consultancy AVITAS. “Boeing faces not just technical challenges but a broader crisis of confidence that each incident reinforces.”
Industry analysts from Bloomberg Intelligence suggest Boeing’s recovery timeline could extend further if investigations reveal any maintenance or design concerns related to the older 737 models. While early reports indicate airport conditions and operational factors likely contributed significantly to the accident, Boeing can ill afford any additional safety questions.
The crash also highlights the challenging environment for global aviation. The International Air Transport Association projects airline industry losses could exceed $84 billion in 2020, with passenger traffic not expected to return to pre-pandemic levels until at least 2024. These financial pressures may complicate airlines’ fleet renewal plans, potentially affecting Boeing’s order book.
As investigators work to determine the precise cause of the Air India Express crash, Boeing faces the delicate task of cooperating fully while protecting its brand from further damage. For investors, the incident serves as a stark reminder that Boeing’s path to recovery remains fraught with challenges that extend well beyond the pandemic’s immediate impact.
