Air India Run 787 Dreamliner Crashes, Boeing's Shares Drop 4.8%

Air India-operated Boeing’s BA 787-8 passenger jet, carrying 242 people bound for London, crashed yesterday in Ahmedabad, India. This accident raised concerns about safety in air travel, and as a consequence, shares of Boeing fell 4.8% yesterday. Pre-market trading is showing a further decline of 1.1%. All passengers, except one, and all crew members lost their lives.

This fatal accident is raising questions about the safety of Boeing’s commercial airplane model. Although the 787-8 Dreamliner is involved in such a devastating accident for the first time, Boeing’s 737 Max model was involved in two major crashes and was grounded for almost a year. It was allowed to resume operation after adding safety measures.

Investigation Is on, Black Box Recovered

The real reason behind the fatal crash of Air India flight (AI 171) is still being investigated by government agencies. Analyzing the videos, a few aviation experts suggested that the lack of engine thrust after takeoff was the primary reason behind the accident. 

Experts are considering the failure of the dual engines of Boeing’s 787-8 Dreamliner as the cause of the crash. Some experts also suggested that a bird hit or a lack of fuel supply might have stopped the engines from functioning properly, which is the lifeline of the aircraft.

One of the two black boxes of AI 171 has been recovered from the wreckage, and the search continues for the other. While engine failure, human error or lack of proper maintenance are the probabilities linked to the accident, the exact cause will come to light only after a thorough analysis.

What Is Boeing’s Stand After the Accident

Boeing’s management has offered its deepest condolences to the loved ones of the passengers and crew on board Air India Flight 171, as well as everyone affected in Ahmedabad. The company also informed that it will offer full support to the investigation led by India’s Aircraft Accident Investigation Bureau.

Boeing’s Backlog

The company still has a long backlog for its commercial aircraft model. The total backlog of Boeing’s different models of commercial aircraft is 5,943, which indicates wide acceptance of its aircraft among the airliners. 

Many airliners might reconsider their existing orders with Boeing after the fatal crash of AI 171, which can benefit its rival Airbus Group EADSY. Airbus’ current backlog of commercial aircraft stands at 8,630.

What's Next for the Aviation Industry

Thousands of flights took off and landed safely globally on the same day. Such incidents affect the confidence of the flier, yet that does not stop airliners from carrying out their operations.

Last year, Boeing projected a 3% increase in airplane deliveries over the next 20 years, with airliners requiring nearly 44,000 new commercial airplanes by 2043. Per this projection, there is ample scope for aircraft producers and suppliers to provide the necessary parts to build airplanes. Boeing uses General Electric’s GE unit GE Aerospace and Rolls Royce engines for its aircraft. The engine supplier will benefit from the increasing demand for new airplanes.

BA’s Zacks Rank

Boeing currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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