Boeing faces criminal probe over manufacturing woes: WSJ
Boeing (BA) shares fell sharply Monday morning following a report from The Wall Street Journal that the Department of Justice has launched a criminal investigation into the company. This comes as Boeing continues to grapple with lingering headwinds stemming from a safety incident involving an Alaskan Airlines (ALK) flight in January.
The Department of Justice's investigation will delve into Boeing's recent production and manufacturing mishaps, which have also impacted the broader airline industry, from flight availability to crew employment and ticket prices.
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Editor's note: This article was written by Angel Smith
Video Transcript
- Boeing, following this morning on a report from "The Wall Street Journal," saying the Department of Justice has launched a criminal investigation into the company. The DOJ is investigating that the incident that occurred in January, when a door plug blew out of an Alaska Airlines flight, leaving a hole on the plane, forced an emergency landing here.
And you're taking a look at shares of BA down by about 3%. It's not even just what the DOJ is going to be looking into. It's also how this is impacting some of the airlines more broadly here. You've got Delta Airlines. Even as the CEO told me-- Ed Bastian told me on the most recent earnings results that he had full faith in Boeing, it still seems that there are, among all of the airlines that have orders in for any part of the max fleet, for Delta, specifically, that's the MAX 10, which they had expected to be delivered by 2025.
Many of these airlines, Delta included, now pushing out that timeline. Delta had actually also taken action and announcing an agreement for 20 Airbus A350-1000 with options for 20 more. Those, though, are also expected to begin being delivered in 2026 here.
So this really just places even more of a capacity consideration in front of many of these airlines, who are not just trying to restore capacity coming into last year and maintain that, but also making sure that their route schedules, they have enough aircrafts to deliver upon those route schedules, too.
- Yeah, certainly, there are many headwinds facing Boeing, at least, in the short term. We've seen that reflected in the stock price since the start of the year. You're looking at shares off since January 1st, more than 20% off, just about 26% year to date, the worst performer that we have seen in the Dow Jones Industrial average.
So putting that in perspective. And you take a look out here over the next couple of quarters what is going to be the catalyst to turn things around it? Seems like headline after headline is still laying out a very challenging roadmap for Boeing. Yes, CEO Dave Calhoun has reiterated the fact that he has full confidence in winning back some of that lost confidence that we have seen since the start of the year, really, over the last several years with all the unfortunate incidents that have happened surrounding Boeing's aircraft.
But again, when you get comments, like you were just talking about from Ed Bastian over at Delta talking about how this could potentially impact the 737 MAX 10 in the future, a potential delay there. This could be an issue that may not be resolved now for some time to come. And could be an issue that continues to weigh on Boeing stock.
- It has multiple prongs here, too. It impacts the airfare prices at the end of the day, too, especially if you're looking at some of the fleets not being able to have enough different routes that are coming on, so the frequency of the routes. It impacts the employment situation and the number of pilots that are expected to come on board.
We already heard from one such airline, I believe it was United last week, that it said, for some of the pilot entry into their workforce, they've now been holding off on bringing people fully in off of those training programs and whatnot, so employment, airfare prices, then, of course, the investor perspective, as well here, too.
