Boeing Shares Down By 8% After Air India Crash: Should You Pass Or Invest?

Shares in Boeing Co. plunged nearly 8% on Wednesday following the first fatal crash involving a Boeing 787 Dreamliner. The aircraft, operated by Air India as Flight AI171, crashed shortly after take-off from Ahmedabad, India, killing all 242 people on board along with at least five people on the ground.

Catastrophic Crash Sends Shockwaves Across Markets

The wide-body 787-8 Dreamliner, bound for London Gatwick, issued a mayday call just minutes after take-off. The aircraft reportedly struggled to gain altitude and descended rapidly before crashing into the Meghani Nagar residential district, causing a massive fire and widespread structural damage in the area, The Guardian reported.

Boeing Shares Tumble; Suppliers Also Affected

Boeing's stock dropped 7.8% in pre-market trading on the New York Stock Exchange and closed at just under £137 ($174), down from £149 ($189) the previous day—wiping out approximately £7.1 billion ($9 billion) from its market capitalisation.

Reuters reported that the crash triggered broader market jitters, with related aerospace companies including Spirit AeroSystems and GE Aerospace falling 4–6%.

A History of Turbulence for Boeing

This tragedy further undermines Boeing's already precarious safety reputation. The manufacturer is still recovering from multiple crises, including two fatal crashes involving its 737 MAX aircraft in 2018 and 2019, and the widely publicised 2024 mid-air blowout of a door panel on a 737 MAX 9.

Only last month, Boeing agreed to pay a £860 million ($1.1 billion) settlement to the US Department of Justice in response to criminal fraud charges related to the 737 MAX programme.

This incident marks the first fatal crash of a Boeing 787 Dreamliner since its introduction in 2011.

Valuation Concerns: Is Boeing Overpriced?

Prior to the crash, Boeing was trading at a forward price-to-earnings (P/E) ratio of approximately 33, significantly higher than its European rival Airbus, which sits at around 27. Analysts had warned that these valuations may be unsustainable given the company's ongoing quality control and supply chain issues.

Brokerages including Morgan Stanley, Barclays, and Jefferies currently maintain a 'Hold' rating on Boeing, citing risks related to production delays, safety audits, and leadership instability. However, Boeing's order backlog remains strong, supported by long-term contracts with Emirates, Ryanair, and United Airlines.

Mixed Investor Sentiment: Institutions Hold, Retail Uncertain

Institutional holders such as BlackRock and Vanguard have not made public moves to reduce their exposure to Boeing post-crash. However, sentiment among retail investors remains sharply divided.

On forums such as Reddit and Seeking Alpha, some traders view the decline as a buying opportunity, while others caution against further downside risks.

Options trading has surged in the aftermath, with elevated put-call ratios for June and July contracts, suggesting a bearish short-term outlook.

Strategic Take: Risk and Reward in a High-Stakes Sector

Boeing's defence, space, and global services divisions remain profitable and may offer some insulation against volatility in the commercial aircraft sector. Yet persistent issues—ranging from delayed certifications in China to questions over executive leadership—continue to cloud its long-term prospects.

Conclusion: Proceed With Caution

Whether Boeing's recent stock decline is a temporary dip or a sign of deeper structural issues will depend heavily on the findings of the crash investigation and the speed of the company's response.

For risk-averse investors, caution remains the prudent path. For those with higher risk tolerance and a long-term horizon, this may present a speculative opportunity to buy into one of the world's most strategically important aerospace manufacturers.