President Trump talked to Boeing's (BA) CEO Tuesday as Lion Air plans to cancel 737 Max jet orders and switch to rival Airbus (EADSY), while more nations and carriers grounded the Max 8 jet. Boeing stock flashed a sell signal.
XSources told Bloomberg that Trump and Dennis Muilenburg talked. Earlier, Trump tweeted that planes "are becoming far too complex to fly."
Meanwhile, Bloomberg also reported Indonesia's Lion Air is now looking to scrap a 200-plane, $22 billion order for Boeing 737 Max jetliners. Relations between Boeing and the carrier had already soured after a 737 Max 8 crashed Oct. 29.
And Kenya Airways said it may back off plans to buy the 737 Max, though it hadn't placed a firm order yet. Instead, it may buy Boeing 787 Dreamliners or Airbus planes.
Sunday's Ethiopian Airlines crash bore similarities to the earlier Lion Air crash. Both plunged soon after takeoff, killing everyone on board. Lion Air is now said to be considering the rival jet that the Boeing 737 Max aimed to counter — the Airbus A320neo.
On Tuesday, Britain joined a growing list of countries that have grounded or banned the Boeing 737 Max 8. The British Civil Aviation Authority called this "a precautionary measure." Ireland, India and the European Union soon followed. About 60% of the 737 Max 8 is now grounded.
Also Tuesday, U.S. Senators Mitt Romney, R-Utah, and Elizabeth Warren, D-Mass., were among the growing list of lawmakers calling on the FAA to ground 737 Max 8s. Flight attendants and ground crews at Southwest and American Airlines did so as well.
Boeing said Tuesday it has full confidence in the 737 Max and doesn't plan to issue new guidance to the plane's operators.
Warning For Boeing Stock
The Lion Air and U.K. moves add to headaches for Boeing, with thousands of orders for the narrow-body passenger jet at stake. The best-selling Boeing 737 Max contributes almost a third of the company's operating profit.
Analysts warn of serious repercussions for Boeing stock. Jefferies said a full halt to deliveries could cost Boeing about $5.1 billion, or 5% of annual revenue, within two months.
Edward Jones lowered its rating on Boeing stock to hold from buy, citing a potential hit to earnings from order delays and cancellations.
And DZ Bank became the first brokerage in nearly two years to place a "sell" rating on Boeing stock, Reuters reported. The firm set a price target of 333, the lowest on Wall Street.
Boeing Stock Technical Analysis
Boeing stock tumbled 6% to close at 375.41 on the stock market today, undercutting its 50-day average for the first time in two months, after falling 5.3% Monday. Rival Airbus gained 1.8%.
In late January, Boeing stock had cleared a 373.80 buy point from a lopsided double bottom base and continued to rise.
But Tuesday's losses mean Boeing stock has flashed a round-trip sell signal, which means a stock has climbed more than 10% from buy point and then given it all up.
Stocks of key Boeing suppliers and airline customers also continued to suffer Tuesday.
Spirit AeroSystems (SPR) fell 1%. Among other aerospace suppliers, Triumph Group (TGI) fell 1.2% while Hexcel (HXL) rose 0.6%.
Southwest Airlines (LUV) lost 2.3%, American Airlines (AAL) gave up 3.5% and Air Lease (AL) added 0.6%.
Cannacord Genuity noted Ducommun (DCO) is a supplier with hefty Boeing 737 exposure and United Technologies (UTX) provides a sensor for the Max 8 flight control system.
FAA Vouchsafes Boeing 737 Max Jets
Earlier, China and Indonesia, as well as Cayman Airways and Ethiopian Airlines, grounded their fleets of Boeing 737 Max 8 jets.
On Monday, South Africa's Comair also grounded its 737 Max 8s. Carriers in Iceland, South Korea, Mexico, Brazil and Argentina followed, while regulators in Australia, Malaysia and Singapore suspended 737 Max flights.
In contrast, the FAA said late Monday that the Boeing 737 Max plane remains airworthy.
Still, the U.S. aviation regulator said it expects to mandate software updates by April, and Boeing said updates will come within weeks.
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The post Trump Steps Into Spiraling Boeing 737 Crisis As More Sales Are At Risk appeared first on Investor's Business Daily.
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