By Spencer Feingold
Three days since the crash of Ethiopian Airlines flight 302, Boeing’s stock continues to fall, dragging the Dow Jones Industrial Average down with it.
“This stock and the industry as a whole are going to take it on the chin right now,” Aquiles Larrea, CEO of Larrea Wealth Management, told Cheddar on Tuesday. “It is going to be a bloodletting.”
The markets closed Tuesday afternoon with the Dow down 96 points; Boeing stock was down by more than 6 percent.
“Boeing has such a huge weight ... it affects the entire index as a whole,” Larrea explained.
The Boeing 737 MAX plane, owned and operated by Ethiopian Airlines, crashed on Sunday shortly after takeoff from Addis Ababa en route to Nairobi, Kenya. All 149 passengers and 8 crew members on board were killed.
The crash is the second 737 MAX plane to crash in less than a year. In October 2018, a Lion Air flight plunged into the Java Sea of the coast of Indonesia, killing all 189 people on board.
Boeing's stock price took an immediate hit when markets opened on Monday. The situation worsened for the company on Tuesday after European aviation authorities suspended all Boeing 737-8 MAX and 737-9 MAX airplanes from operating over the EU.
The EU joins dozens of countries, including India, China, Indonesia, and Australia, that have banned the planes as a safety precaution.
Boeing said in a statement released Tuesday that it understood “regulatory agencies and customers have made decisions that they believe are most appropriate for their home markets.”
The U.S., however, has so far not taken action against the airline.
Several lawmakers from both sides of the aisle, including Mitt Romney, Elizabeth Warren, and Ted Cruz, have called for Boeing planes to be grounded.
“Further investigation may reveal that mechanical issues were not the cause, but until that time, our first priority must be the safety of the flying public,” Senator Cruz, who chairs the Senate’s subcommittee on aviation and space, said in a statement.
Yet despite the pressure, the U.S. Federal Aviation Administration (FAA) stood by its decision not to restrict the Boeing planes from U.S. airspace. "Thus far, our review shows no systemic performance issues and provides no basis to order grounding the aircraft," FAA said in a statement Tuesday evening.
Nonetheless, Larrea warned that even if the troubles facing Boeing turn out to be a "blip on the radar," financial advisers are unlikely to take the risk of sticking with the company.
“The sharks see blood and we are going to see a lot of sell off,” he predicted.
For full interview click here.