THE STREET ANALYSTS

The Plane in question was a Boeing 737, however it is important to note that it was not a Boeing 737 Max, but rather a much older model, the Boeing 737-500, which were built during the 1980s and 90s. Although this is a relatively old plane, it is not uncommon to see one still in use as they did have a very strong safety record.

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The plane was flying with Sriwijaya Air and was last contacted just 4 minutes after take-off at 14:40. Website Flightrader24.com said that the aircraft had lost more than 3,000m of altitude in less than a minute.

Witnesses also say that they had seen an explosion. A local fisherman Solihin told the BBC that ‘The plane fell like lightning into the sea and exploded into the water,’ adding that ‘shards of a kind of plywood almost hit [his] ship.’

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Indonesia does have a poor aircraft safety record, as it was an Indonesian Airline Lion Air that piloted the Boeing 737 Max in October 2018, which crashed killing 189 people. Although it was decided it was the fault of the plane’s design, the airline and pilots were also heavily criticised.

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For more than a decade all Indonesian Airlines were on the EU’s blacklist, but were removed in 2018, before the loss of the Lion Air 737 Max.  The US federal Aviation Administration also had Indonesia’s safety evaluation as a Category 2 between 2007 and 2016, which means that it was inadequate.

This news comes just a day after Boeing agreed a settlement of over $2.5 billion with the US Department of Justice due to the two crashes that killed a total of 346 people. This includes a fine of $243.6 million, which was for deceiving the FAA about a safety system called the MCAS.

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Boeing managers told engineers working on the MCAS that it could not require the pilots to go through extra training as that would cost ‘tens of millions of dollars. This $243 million dollar fine represents the money they saved by doing this.

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This shows the profit maximising ethos at Boeing, and whist the CEO has changed, this incident will show them the price of cutting corners, especially in such a heavily regulated industry as aircraft manufacturing. The crashes have now cost Boeing around $20 billion.

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But these fines are unlikely to affect Boeing’s stock price come Monday. Whilst they may lose some reputation there is not much left to lose, and the majority of the settlement has already been paid off. The settlement also sidesteps any chance of criminal charges, which would have definitely affected the stock.

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The affects of the Sriwijaya Air crash on Boeing’s stock are not let clear, as the reason for it is unknown, and the model involved was over 20 years old, but we are awaiting further information. More news on the matter to follow.