Case Background:
On January 5, 2024, a Boeing 737 aircraft operated by Alaska Airlines experienced an in-flight departure of an in-cabin door plug, causing the cabin to become depressurized and forcing an emergency landing. On January 7, 2024, the Federal Aviation Administration (“FAA”) issued a grounding order, stating that "Boeing 737-9 aircraft will remain grounded until operators complete enhanced inspections which include both left and right cabin door exit plugs, door components, and fasteners," and that "[o]perators must also complete corrective action requirements based on findings from the inspections prior to bringing any aircraft back into service." On this news, Boeing's stock price fell $20.00 per share, or 8%, to close at $229.00 per share on January 8, 2024.
Then, on January 9, 2024, news outlets reported that United Airlines had found loose bolts on exit door plugs during their FAA-mandated inspections of Boeing 737 Max planes. The reports also noted that Alaska Airlines said its initial inspections of the jets had turned up "loose hardware." On this news, Boeing's stock price fell $3.24 per share, or 1.4%, to close at $225.76 per share on January 9, 2024.
On January 11, 2024, news outlets reported that the FAA had informed Boeing it had launched a formal investigation into whether Boeing had failed to properly ensure its aircraft were safe for operation. On this news, Boeing's stock price fell $5.18 per share, or 2.3%, to close at $222.66 per share on January 11, 2024.
On January 12, 2024, news outlets reported that the FAA would increase oversight of Boeing’s production and manufacturing processes. The FAA stated that a comprehensive audit is set to be conducted on the Boeing 737 MAX 9 production line and its associated suppliers, specifically to assess Boeing's adherence to approved quality procedures, which could result in further audits. On this news, Boeing's stock price fell $4.96 per share, or 2.2%, to close at $217.70 per share on January 12, 2024.
Then on January 16, 2024, Wells Fargo downgraded Boeing, citing risks associated with the FAA's inspection of Boeing's production. On this news, Boeing's stock price fell $17.18 per share, or 7.9%, to close at $200.52 per share on January 16, 2024.
Finally, on January 24, 2024, news outlets reported that the FAA had announced that it would not allow Boeing to expand production of the 737 MAX due to safety concerns related to the January 5, 2024 incident. On this news, Boeing's stock price fell $12.25 per share, or 5.7%, to close at $201.88 per share on January 25, 2024.
The complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material facts, including that: (1) Boeing had been prioritizing its profits over safety, which led to poor quality control standards in the production of its commercial aircrafts such as the 737 MAX; and (2) as a result, there was a heightened risk of manufacturing flaws that could render Boeing’s new airplanes unsafe, which materialized during the Class Period.
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