Boeing CEO admits to mistakes in Max 9 blowout, vows transparency in probe

Boeing  (BA) - Get Free Report shares steadied in early Wednesday trading, following two days of declines, as CEO Dave Calhoun acknowledged the planemaker's mistakes linked to the blowout of an Alaska Airlines fuselage and vowed it would never happen again.

Speaking at a hastily arranged town hall meeting in Renton, Wash., Calhoun told Boeing employees that he was "shaken to the bone" by the late Friday incident, which involved a Boeing-made 737 Max 9 jet. 

Hundreds of U.S. flights linked to the Max 9 were grounded Tuesday as the Federal Aviation Administration and the National Transportation Safety Board continued to investigate the accident. The incident forced Alaska Airlines flight 1282 to make an emergency landing when the door plug of the single-aisle jet suddenly blew out.

"We're going to approach this, number one, acknowledging our mistake," Calhoun said. "We're going to approach it with 100% and complete transparency every step of the way." 

Boeing shares were marked 0.18% higher in premarket trading to indicate an opening bell price of $226.16 each.

Fund manager sees minimal impact

Tony Bancroft, portfolio manager for the Gabelli Commercial Aerospace & Defense ETF, thinks Boeing's overall liability for the incident is likely "immaterial," although it could harm near-term production targets.

"Boeing will need to put out good planes and make sure they're incident-free, but I continue to like the stock and all the secular structural tailwinds of commercial aviation," he said.

The 737 Max 9 grounding comes just as Calhoun looks to revive the aerospace giant's reputation and capitalize on a historic surge in aircraft demand from carriers around the world.

Boeing is also hoping to win permission to resume deliveries of its 737 Max aircraft to China, the world's biggest aircraft market, following its suspension of service in 2019 linked to fatal crashes in Indonesia and Ethiopia.

The workhorse jet, Boeing's most-profitable aircraft, resumed service last year, but new deliveries had been placed on hold by the civil aviation authorities as they investigate changes to the aircraft's aviation control system software.

Boeing, which hasn't posted a profit since June 2021, will report fourth-quarter earnings on Jan. 31, with investors looking for a loss of 93 cents a share on revenue of just over $21 billion.

Boeing ended the third quarter with 252 of its 737 Max in inventory, with its order book rising by 224 planes, with just 10 cancellations.

The group's overall order book now stands at 5,172 planes, the highest since December 2019, valued at around $58 billion.

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