(Reuters) – Shares of Boeing Co (BA.N) dropped more than 12% on Monday amid a broader market plunge as pressure mounted on global aviation from the spread of the coronavirus and U.S. regulators said they disagreed with Boeing’s argument about the safety of wiring bundles on the grounded 737 MAX jet.
FILE PHOTO: The company logo for Boeing is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 11, 2019. REUTERS/Brendan McDermid – RC1901E5ACE0/File Photo
Underscoring the global risks for America’s largest exporter, Ethiopian investigators singled out faulty 737 MAX systems in a new interim report on last year’s crash, the second of two fatal accidents that plunged Boeing into its worst-ever crisis.
Industry sources said airlines, facing a sharp drop in travel demand due to rising coronavirus outbreaks, were starting to request deferring aircraft deliveries and cash downpayments to Boeing and European rival Airbus (AIR.PA).
Boeing shares were down at $229.12 in afternoon trading, a level not seen since 2017.
Adding to a sense of mounting anxiety, Boeing’s new Chief Executive Officer Dave Calhoun was forced to apologize to senior staff after a rare attack on his predecessor and company leadership, which sources say provoked criticism from within the senior ranks of the company as well as the rank-and file.
Calhoun, who took over as CEO in January after serving about a decade on Boeing’s board, told senior staff by email on Friday he was “both embarrassed and regretful” over his comments in a New York Times interview earlier in the week.
“It suggests I broke my promise to former CEO Dennis Muilenburg, the executive team and our people that I would have their back when it counted most,” Calhoun said. “I want to reassure you that my promise remains intact.”
Calhoun’s email came as the U.S. Federal Aviation Administration (FAA) told Boeing on Friday it did not agree with the planemaker’s argument that its 737 MAX wiring bundles meet safety standards. Nonetheless, the FAA said it was now up to Boeing to decide how to proceed.
Separately, Boeing said an employee at its Everett facility in Washington state had been quarantined after testing positive for the coronavirus.
Boeing in February said it did not believe it was required to separate or move wiring bundles on its grounded 737 MAX jetliner that regulators had warned could cause a short circuit on the 737 MAX, and lead to a crash if pilots did not react soon enough.
There are more than a dozen different spots on the 737 MAX where wiring bundles may be too close together. Most of the locations are under the cockpit in an electrical bay.
Boeing has noted in talks with the FAA that its 737 NG has the same wiring bundles and has been in service since 1997, logging 205 million flight hours without any wiring issues.
A company official told Reuters in January, Boeing had been working on a design that would separate the wiring bundles, if necessary. But moving the bundles could pose further delays to the return of the MAX. A key certification test flight is not currently expected until April or later.
Reporting by Rachit Vats in Bengaluru, Eric M. Johnson in Seattle, Tracy Rucinski in Chicago and Tim Hepher in Paris and additional reporting by Rama Venkat in Bengaluru; Editing by Bernard Orr, Tom Brown and Anil D’Silva