United Airlines loses $600 million in market cap on news that FAA is opening a probe after airline’s 10th safety flub in just 2 weeks

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United Airlines shares fell about 4% Monday—wiping out about $600 million of its market capitalization—following United’s Friday announcement that the Federal Aviation Administration would increase oversight of the airline following a series of safety gaffes.

“The number of safety-related events in recent weeks have rightfully caused us to pause and evaluate whether there is anything we can and should do differently,” Sasha Johnson, United Airlines’ vice president of corporate safety, said in a memo to employees late Friday. “We welcome their engagement and are very open to hear from them about what they find and their perspective on things we may need to change to make us even safer.”

The FAA told Fortune in a statement that the oversight will “ensure that [United] is complying with safety regulations; identifying hazards and mitigating risk; and effectively managing safety.” It may prevent the airline from making new routes ahead of the busy summer season and may also delay future projects, depending on the oversight’s findings. The FAA also suspended United from promoting and approving pilots to fly different plane models, Bloomberg reported. 

The crackdown underlies the seriousness with which the regulator is responding to safety meltdowns in the airline industry, which have appeared abundant lately.

United had a run of 10 safety misfires in the two weeks leading up to the FAA’s increased scrutiny: A flight from Houston on March 4 was forced to return to the airport shortly after takeoff because its engine caught on fire. Several days later, a Boeing 777-200 in United’s fleet sat on the runway for over an hour before being deplaned because of a broken engine. The airline also had trouble with a missing panel on a plane’s fuselage; a Boeing 737 MAX that rolled onto the grass next to the taxiway; and another Boeing 777-200 that lost a tire midair, the debris of which landed in the airport’s parking lot, damaging several cars. 

‘They are all unrelated’

“Unfortunately, in the past few weeks, our airline has experienced a number of incidents that are reminders of the importance of safety,” United CEO Scott Kirby said in an email to customers. “While they are all unrelated, I want you to know that these incidents have our attention and have sharpened our focus.”

United is familiar with navigating crises in the industry. The airline filed for Chapter 11 bankruptcy in 2002, unable to continue operating after the 9/11 attacks rocked trust in the U.S. aviation business. It underwent a record 1,150 day restructuring process that saw a 30% reduction in staff and 20% reduction in aircrafts. Despite emerging from bankruptcy in 2006, the airline, once the second-largest in the world, failed to make significant gains, growing only 3.8% since that time.

Today’s shareholder mistrust in United coincides with Boeing CEO Dave Calhoun announcing his departure this year following months of mishaps across airlines and an FAA investigation which exposed dozens of issues within the manufacturer’s culture. Boeing’s shares jumped as much as 3.6% immediately following the news.

Boeing and United have more than just repeated cataclysms in common. They have a shared history dating back to the airline’s inception. Not only was Boeing Air Transport—first intended for international postal delivery—the precursor to United Airlines, but United Airlines helped Boeing skyrocket to success. In 1990, United bought the 1,832nd 737 aircraft, cementing its status as the world’s best-selling plane. The entities’ fates were inextricably linked then, but there are key factors that could spare one of them as United undergoes an FAA probe of its own.

How much is Boeing to blame for United’s troubles?

Despite United’s safety misfires occurring on Boeing planes—which make up about 80% of United’s fleet—airline consultant James Darcy of Darcy Strategic said that United likely needs to shoulder some of the blame. 

“There’s really nothing in these incidents that I’ve seen to date that would suggest that the accountability lies with Boeing, for each of them,” he said. “It’s much more reasonable to do what the FAA has done, which is to turn to United and to say, ‘We need to understand if there’s an underlying issue here.’”

Given the wide gamut of United’s safety incidents, the mistakes don’t appear to be related and could be attributed to either the manufacturer or maintenance by the airline. A March 8 incident in which a United-operated Boeing 737 returned to the airport shortly after taking off was due to the engine ingesting a piece of bubble wrap.

“That could have happened on any engine, any airplane, by any manufacturer,” Darcy said.

On the other hand, a hydraulic failure of a separate United flight could indicate a maintenance mistake or a premature failure of a part. It’s just too early to dole out blame, he argued. 

The increased oversight also doesn’t mean that United has reason to panic: “In this industry, trouble is rarely portioned out to companies over time,” Darcy said. “It tends to be delivered in large, lump-sum payments.” 

There’s also pressure on the FAA, which was heavily scrutinized in how it handled two Boeing 737 crashes in 2018 and 2019, which killed hundreds of passengers. After the accidents, the FAA reworked its oversight rules. That may mean lots of investigations these days, Darcy asserted, but it’s a correction to regulatory laxity that may have missed problems in the past.

“That’s probably all good news for the flying public,” he said.

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