Boeing Slumps After Panel Blowout Leads To Partial 737 Grounding

(Bloomberg) -- Boeing Co. slumped the most in more than a year after its 737 Max 9 model was temporarily grounded by authorities following a Jan. 5 accident involving a recently delivered airliner.

The shares fell 8.3% at 9:30 a.m. in New York, the biggest intraday decline since October 2022. Supplier Spirit AeroSystems Holdings Inc., which makes the fuselage for the 737, slid 10%, while Alaska Air Group Inc., the parent of the carrier involved, dropped 2.8%.

Investors offloaded Boeing as they absorbed the possible fallout from the accident. The Alaska Airlines flight lost a panel during flight on Friday, leaving passengers exposed to a gaping hole in the side of the aircraft. While nobody was seriously injured in the episode, the accident puts the spotlight on possible manufacturing defects at Boeing and Spirit. Investigators said it’s too soon to say what may have prompted the part to come loose while the aircraft was during ascent.

Aiding the investigation will be the discovery of the panel on the ground two days after the accident. The finding stands to help determine went wrong on Flight 1282, which was carrying 171 passengers from Portland, Oregon. National Transportation Safety Board Chair Jennifer Homendy said only luck prevented a more disastrous outcome. 

The US Federal Aviation Administration has temporarily grounded the Max 9 for safety checks, affecting 171 aircraft around the world. Most of these are in the US, where Alaska and United Airlines Holdings Inc. are the biggest operators.

The recovery of the door plug is an important breakthrough in the investigation, though the NTSB hasn’t been able to secure some other key evidence. The jet’s cockpit voice recorder, which has a two-hour recording time, was overwritten and that data has been lost. Investigators will also look into the airline’s handling of several pressure warnings on previous flights, and any maintenance performed post-delivery, Homendy said.

Other items apparently from the plane have been discovered, including an intact and functioning Apple Inc. iPhone.

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The door plug on the aircraft, which had just entered service on Nov. 11, was found in the backyard of a Portland-based school teacher, Homendy said. Other areas of focus for the NTSB at Sunday night’s briefing were around the oxygen masks that were deployed and the state of the plane after the incident.

Flight 1282’s auto pressurization fail light had lit up on three previous flights, most recently on Jan. 4, Homendy said. In those instances, crew had flipped the switch to “alt mode,” which is acceptable considering there’s a backup.

The NTSB chair said there was a decision by Alaska Airlines, after the light had come on, to put in place a restriction that prevents a plane from flying long distances, or in Alaska Airlines’ case, being flown to Hawaii over water. A maintenance check was ordered by the airline but hadn’t been carried out, she said.

“I’m sure I will be asked if there is any correlation between the light that illuminated and the expulsion of the door plug,” Homendy said. “We don’t know that there was any correlation.”

Regulators reacted swiftly to Friday’s incident, grounding 171 of the variant less than 24 hours after the incident, including the entire fleet of 737 Max 9s in the US.

Homendy said the circuit breaker for the plane’s cockpit voice recorder wasn’t pulled because while the maintenance team went out to get it, it was “right at about the two hour mark and it was completely overwritten at two hours.”

“The NTSB has many times talked about the need to increase the time on CVRs from two hours to 25 hours, which is consistent with Europe and many other countries,” she said. “Because that information is key not just for our investigation, but for improving aviation safety.”

Homendy also described the events that look place inside the plane after the huge bang and explosive cabin depressurization, noting the cockpit door flew open, hitting the lavatory door and sticking there. A checklist for the pilots to refer to in cases of emergency that was laminated to the cockpit in front of them also flew out of the plane and the first officer jolted forward, losing her headset in the process.

The captain quickly reached for a backup reference handbook in the seat beside him and both he and the first officer put on their oxygen masks and turned on the speaker so they could communicate again with the cabin crew.

“I do want to emphasize that the actions of the flight crew were really incredible,” Homendy said, adding it would have been chaotic and violent, with the wind from the outside being very loud once the door plug was expelled out of the plane.

The fact there were no people sitting in seats 26A and 26B was just by chance. Seat 26A was twisted and the head rests on seats 25A and 26A were missing. The seat back on 26A was also gone as were some tray tables, although there was no structural damage to the outside of the plane whatsoever.

All the oxygen masks were also down and some close to the gaping hole had been sheared off. There was also a lot of damage to the interior panelling trim. 

“My impression when I saw that is it must have been a terrifying event to experience,” Homendy said.

--With assistance from Adrian Leung.

(Updates with additional details of investigation, share trading beginning in fourth paragraph)

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