The new revelations pose fresh challenges for Boeing, which is reeling under pressure after two fatal crashes forced the company to ground the planes and book billions of dollars in losses.
Boeing’s shares fell as much as 5.7% to $324.40 in early trading on Monday, making the stock the biggest percentage loser on the Dow Jones Industrial Average .DJI. They have lost 18% of their value since the second deadly crash of the popular single-aisle jet in March.
The planemaker has already cut production of the MAX, and analysts said there was an increasing possibility that the company would have to halt production altogether.
“We see increasing risk that the Federal Aviation Administration won’t follow through with a certification flight in November and lift the emergency grounding order in December,” UBS analyst Myles Walton said, downgrading the stock to “neutral” from “buy”.
Walton cut his target price on Boeing’s shares by $95 to $375, citing an increase in “likelihood of a pause on the 737 MAX production system” due to a delay in the jet’s return.
UBS also downgraded Boeing’s biggest supplier, Spirit AeroSystems , to “neutral” from “buy” and cut its target price on the stock to $88 from $92.
BILLIONS IN LOSSES
Boeing’s shares fell nearly 7% on Friday after Reuters first reported the news, which prompted a demand by U.S. regulators for an immediate explanation and a new call in Congress for the company to shake up its management.
The company on Sunday expressed regret over the messages, and said it was still investigating what they meant.
Credit Suisse, which had stuck to its “outperform” rating since July 2017, downgraded the stock to “neutral” and cut its target price by $93 to $323, 6% below Boeing’s Friday closing price of $344.
With the likely delay in MAX’s return to service until February 2020 and the stoppage of production, the American planemaker could record $3.2 billion in charges over four months on top of a $5.6 billion charge taken so far, analyst Robert Spingarn said.
Bank of America Merrill Lynch reduced its price target on Boeing’s shares to $370 from $400, saying there were many questions swirling around Boeing’s culture, brand and corporate governance following the latest developments.
“Risk management, disclosure and accountability of management and the board …. could weigh on the stock in the wake of this setback,” BofA analyst Ronald Epstein said.
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