IG News: Boeing Shares Have Recovered After The Accident of a China Eastern Airlines 737-800

Boeing shares plummeted 9.5% from $188 on Monday to $170 on Wednesday after one of the company's most dependable jets crashed. Where does the American behemoth go from here after completing the week at $188？

Boeing (NYSE: BA) shares were valued at $343 before the Covid-19 outbreak, then plummeted to $98 by March 20, 2020. They subsequently rebounded to $269 in mid-March of last year, but have since fallen.

Boeing stock drops after the accident of a China Eastern 737-800NG.

A China Eastern Airlines Boeing 737-800 crashed and caught fire in southern China on Monday. All 132 passengers on board have been declared deceased, and China Eastern Airlines has grounded all of its Boeing 737-800 aircraft. However, the consequences of the catastrophe might be worldwide.

'Flight safety is serious business, and we are actively analyzing the matter,' said Arun Kumar, chairman of India's Directorate General of Civil Association.

In the meanwhile, we are concentrating on increased monitoring of our 737 fleets.'

Meanwhile, a representative for the European Union Aviation Safety Agency cautioned that “we will be carefully following the outcomes of the inquiry and taking any safety steps that are warranted.”

Boeing's image was already tarnished after two 737 MAX disasters in 2019 that lost 346 lives. Cai von Rumohr, a Cowen analyst, now feels that 'consumers may not want to ride on a 737 until the reason of the China Eastern tragedy is confirmed to be a design or manufacturing fault.'

The 737 MAX was grounded for two years throughout most of the globe, with China being the final significant region to refuse to let the aircraft fly again. And, since the 737-800NG is an earlier model of the 737 MAX, this latest tragedy might be terrible for Boeing's Chinese business.

Previously, the business raised its prediction for Chinese aircraft demand to 8,700 new jets by 2040. And David Yu, Professor of Finance at New York University Shanghai, feels that “China delivery is critical to the success of the MAX for Boeing... the region's largest remaining client is China.” They're keeping a close eye on everything.'

Boeing's chances in the nation had already begun to deteriorate. Tens of millions of people have been placed under lockdown as the nation tests the logistical limitations of its “dynamic zero” pandemic policy. Furthermore, heightened political tensions with the United States over the Russia-Ukraine conflict are putting regulatory difficulties for Western corporations working in the communist state to the test.

The cockpit voice recorder, the first of the plane's black boxes, was discovered on Wednesday and is being inspected in Beijing. Boeing CEO David Calhoun has 'given the full assistance of our technical specialists to the Civil Aviation Administration of China's inquiry.'

The CEO will be on pins and needles since the outcomes might determine the company's future in China.

Defense expenditure increases？

Boeing's sales increased 7 percent year on year to $62.3 billion, but the company lost $5 billion.

However, in 2017, sales were $94 billion and pre-tax profit was $10 billion, only five years earlier. As the virus subsides, the projected summer travel boom is becoming more plausible, with Heathrow employing 12,000 more employees to keep up.

And, with Russia promising a less ambitious shift in policy, the prospect of a peace treaty with Ukraine is growing.

Boeing's military sector may potentially thrive in 2022. The battle has disturbed the western world's complacency, according to BlackRock's Larry Fink, who claims it has “put a stop to the globalization we have enjoyed over the previous three decades.”

Germany is increasing its military expenditure to more than 2% of GDP, a promise desired by the US. NATO weaponry, some of it Boeing's, has been effective in holding back Russian soldiers for more than a month. The Presidential Doomsday' 747 has also made news across Europe.

Boeing also has a competitive edge over Airbus. Following Russia's annexation of Crimea, Boeing started stockpiling production-critical titanium, and it currently has an “inventory and variety of titanium sources that ensure adequate supply for aircraft manufacturing.”

As a result, it is no longer purchasing the metal from Russia, even though it is not yet sanctioned. However, Airbus continues to rely on Russia for between 50 and 65 percent of its titanium, leaving it vulnerable to any fresh round of sanctions.

Bernstein, the world's leading aerospace analyst, predicted that Boeing's sales would increase by 34% to $83 billion in 2022, with a price target of $259 per share. This has been lowered to $259 after the collapse.

Boeing shares may have rebounded this week, but future increases may be difficult to achieve. With so many moving elements, determining its direction of movement is challenging.

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