Yahoo Finance | Should Boeing's Safety and Quality Issues Scare Away Investors?
Should Boeing's Safety and Quality Issues Scare Away Investors?
Investors who are well-versed in aerospace stocks know that backlogs, commercial aircraft orders, and government contracts are important. But so is safety. Just one safety incident, particularly when it results in tragedy, can undo years of goodwill built by a company. In the case of Boeing (NYSE: BA), multiple negative episodes have tarnished the company's image. Once upon a time, Boeing was considered a bellwether, must-own industrial stock. Still, that reputation vanished in October 2018 when Lion Air Flight 610, flying a new Boeing 737 MAX, crashed, killing all 189 people aboard. Six months later, Ethiopian Airlines Flight 302, flying an older version of the 737 MAX, also crashed, resulting in 157 deaths. In January 2024, an Alaska Air flight operating a Boeing 737-9 was climbing when an MED plug came loose, causing cabin depressurization. And don't forget the problems with Boeing's Starliner that resulted in astronauts being stuck in space for nine months before a rescue by Elon Musk's SpaceX.
Boeing's safety woes and reputational damage ruined its status as one of the top stocks to buy and hold for the long term. For the 10 years ending April 1, the shares tumbled 18.7% while the S&P 500 gained more than 65% over the same span. That period included Boeing borrowing $50 billion from Uncle Sam and suspending shareholder dividends in 2020. Today, it's one of just three members of the Dow Jones Industrial Average that don't pay dividends. The other two, Amazon and Salesforce, can be somewhat forgiven for not paying dividends because they're tech companies using proceeds to continue growing their operations. As an old-guard industrial company, Boeing ought to be a dependable dividend name. All of that is in the past, but investors cannot afford to simply gloss over the stock's performance over the past decade. For those considering the stock today, some due diligence on corporate culture must be performed because critics claim it was lapses in that culture that led to shortcuts, which may be another way of saying profits, not safety, were the priority. Indeed, Boeing has some skeletons in its corporate culture closet, including allegations of lax governance and failure to listen to whistleblowers. Those are the kind of claims that rightfully give investors pause.
Read more: https://finance.yahoo.com/markets/stocks/articles/boeings-safety-quality-issues-scare-102600554.html

