Boeing Slides After Saudi Arabia's flyadeal Drops $5.9 Billion 737 MAX Order

Boeing shares traded lower Monday after the world's biggest planemaker lost a $5.9 billion order to its European rival Airbus amid concern for the near-term fate of its flagship 737 MAX aircraft.
By Martin Baccardax ,

Boeing Co. (BA) - Get Report shares traded lower Monday after the world's biggest planemaker lost a $5.9 billion order to its European rival Airbus SE (EADSY) amid concern for the near-term fate of its flagship 737 MAX aircraft. 

Saudi Arabia's flyadeal, a budget airline owned by the state-controlled Saudi Arabian Airlines, said it will opt for 30 of Airbus' A320neos, a rival to the 737 MAX, after pulling out of a provisional commitment to buy the grounded jets late last year. flyadeal joins Gulf carriers Oman Air and flydubai in shifting preference to the Franco-Germany Airbus fleet following the grounding of the 737 MAX, which recent reports suggest could last until at least the end of the year.

Boeing shares were marked 1% lower Monday to change hands at $352.55 each, a move that eave the stock down nearly 17.1% since the March 10 crash of Ethiopian Airlines flight 302 that killed 157 people and triggered the aircraft's global grounding.

Boeing shares have fallen around 4.3% over the past two weeks, compared to a 1.05% gain for the Dow Jones Industrial Average, after the U.S. Federal Aviation Administration said it found yet another issue with the planemaker's 737 MAX software that could further delay its return to service.

The FAA also said the testing and procedures were following a process, not a prescribed timeline, for the 737 MAX's recertification, while the International Air Transport Association called for additional training requirements for crews flying the 737 MAX.

U.S. carrier United Airlines (UAL) - Get Report , meanwhile, said t will pull all MAX aircraft from its summer schedule, resulting in around 3,200 cancellations over July and August, and doesn't expect Boeing's flagship plane to return until at least September 3, echoing a similar assessment earlier this month from Southwest Airlines (LUV) - Get Report .

That concern has offset a resumption of U.S.-China trade talks and the hope that the G20 detente between President Donald Trump and Xi Jinping will salvage Boeing's reported plans to sell around 100 twin-aisle 787 and 777-branded planes to China in a $30 billion deal that would be the planemaker's largest sale on record.

Boeing sells around 25% of its planes to China and said demand from the world's second largest economy is likely to top 7,700 jets -- or $1.2 trillion -- over the next two decades.

However, the Seattle Time has recently reported that the U.S. Department of Justice is seeking records from Boeing linked to their probe into 787 Dreamliner safety issues at its South Carolina production facility, which a New York Times report from earlier this spring alleged had been "plagued by shoddy production" and "weak oversight".

The New York Times report said Boeing pressured employees into working more quickly to avoid production delays while "at times ignoring issues raised" by those closest to the Dreamliner's assembly, while the Seattle Times piece did not indicate if the fresh subpoenas were linked in any way with ongoing probes into the 737 MAX certification process.

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