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Is Boeing's (BA) 737 Again in Trouble After Sriwijaya Air Crash?

The Boeing Company BA is once again in the spotlight after a Sriwijaya Air 737 aircraft, carrying 62 people vanished from radar on its journey to Borneo on Jan 9. The old version of the 737 aircraft has supposedly crashed into the Java Sea as the position of both the aircraft’s black boxes were retrieved.

Series of Air Crashes Involving Boeing 737

Over the past couple of years, Boeing has been under immense scrutiny ever since the crash of two 737 MAX planes that killed 346 people. The first crash involved a Lion Air flight 610 and the second, an Ethiopian Airlines flight 302 during March 2019. Ever since these incidents, all of Boeing's 737 MAX planes were grounded worldwide for almost 20 months, leading to a massive hit in Boeing’s revenues. The recent air crash involving the Sriwijaya Air 737 aircraft is the second crash in the Indonesian air space after the Lion Air crash incident.

Boeing’s Woes Continue to Mount

Just when things were getting better for Boeing’s beleaguered 737 MAX aircraft, the recent incident may again slow down its recovery. Over the past couple of months, we did notice steady improvements cropping as many airliners across the globe were considering flying by Boeing’s 737 again. The company, on a brighter perspective, was even awarded new orders.

The Sriwijaya Air Crash took place recently after Boeing agreed to pay $2.5 billion in penalties to settle U.S. criminal charges pertaining to the information hidden from safety officials about the design of its 737 MAX planes. Per a BBC report, approximately $500 million will go to families of the 346 people killed in the air tragedies.

Due to the recent crash involving Boeing's 737, there could again be a high possibility of the Federal Aviation Administration (FAA) probing investigation for the 737-product line, after the aircraft received clearance in November 2020 to make a return to American skies after 20 months of grounding. Moreover, the possibility of order cancellations and prospective orders of Boeing 737 MAX and other variants could take a serious hit due to the recent air crash.

Price Performance

Shares of the company have gained 19.5% in the past six months compared with the industry’s growth of 7%.

Zacks Rank & Key Picks    

Boeing currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the same sector are Leidos Corp. LDOS, AAR Corp. AIR and CAE Inc. CAE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leidos came up with an average positive earnings surprise of 17.57% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has increased 0.3% to $6.39 in the past 60 days.

AAR Corp. delivered an average positive earnings surprise of 124.61% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has climbed 13% to $1.04 in the past 60 days.

CAE Inc. delivered an average positive earnings surprise of 28.35% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has soared 60% to 32 cents in the past 60 days.

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