Air India Crash Tarnishes Boeing 787'S Flawless Safety Record - Morgan Stanley Expects More Regulatory Heat

The deadly Air India plane crash on Thursday, which has claimed 241 lives, was the first fatal accident involving a Boeing 787, causing another setback for the planemaker which is trying to stage a comeback.

The aircraft, operating as Flight AI171 from Ahmedabad to London Gatwick, took off shortly after 1:30 p.m. IST (4:00 a.m. ET) and crashed into a medical college in the Indian city's Meghaninagar neighborhood.

While it is still unclear what caused the aircraft to crash, experts have listed several potential reasons, including bird strikes, manufacturing faults, or errors by the in-flight or maintenance crew, which could have contributed to the accident.

According to TheFly, Jefferies analysts noted that this was the first incident involving a 787 since it entered service in 2011. Boeing has delivered 1,189 of these wide-body aircraft to airlines worldwide.

The brokerage stated that the top operators of the aircraft include American Airlines, United Airlines, Qatar Airways, and Japan Airlines. The 787-8 is the smallest variant of the plane known as 'Dreamliners.'

The crash, the deadliest aviation disaster in India in decades, has severely damaged Boeing CEO Kelly Ortberg's efforts to turn around after a difficult 2024. Last year, the company was rocked by the twin blows of a crippling strike at its facilities and the mid-air blowout of a door plug on a 737 Max-9 jet.

Morgan Stanley analysts said the "best-case scenario” for Boeing would be if it is found that this event was caused by specific circumstances, such as human error, which would not affect new airplane deliveries.

The brokerage added that "worst-case scenario" is a system issue that could potentially ground the fleet and halt new aircraft deliveries.

However, Morgan Stanley says Boeing would still get higher regulatory scrutiny in both scenarios.

The company recently agreed to pay $1.1 billion in a settlement with the U.S. Justice Department to avoid criminal charges over two fatal crashes.

Retail sentiment on Stocktwits was still in the 'bullish' (74/100) territory, while retail chatter was 'extremely high.'

Boeing shares, which fell 4.8% on Thursday, are still up over 14% this year.

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