Boeing’s stock slips after NASA chooses SpaceX to retrieve astronauts

Boeing’s (NYSE:BA) stock on Monday morning fell as much as 1.5% during regular trading in New York as investors mulled the effects of NASA’s announcement that Boeing’s (BA) Starliner space capsule won’t bring back two stranded astronauts. The Standard & Poor’s 500 stock index (SP500) was down less than 1%.

The National Aeronautics and Space Administration on Saturday said Elon Musk’s SpaceX (SPACE) will retrieve the astronauts in February. The return will be eight months later than originally planned.

The decision by NASA presents Kelly Ortberg, Boeing’s (BA) new chief executive, with a predicament about the future of the Starliner program, analysts said.

“This incident could negatively affect Boeing’s (BA) reputation with NASA and it’s unclear if or when the company will have another opportunity to bring astronauts to space,” Ronald Epstein, research analyst at Bank of America Securities, said in an August 26 report. “We would not be surprised if Boeing (BA) were to divest the manned space flight business.”

Seth Seifman, an analyst at financial-services firm J.P. Morgan, said in a report Monday that NASA’s decision “could result in further Starliner losses for Boeing (BA).”

Boeing’s (BA) Starliner on June 6 transported the astronauts to the International Space Station. During that trip, several of the capsule’s thrusters failed and several helium leaks were discovered in a system for changing direction in orbit.

Since then, Boeing (BA) and NASA have worked to determine whether those technical issues would threaten the safety of the astronauts as they left the station and re-entered Earth’s atmosphere in the capsule. The company and NASA next month plan to undock the Starliner from the space station and bring it back unmanned.

Seeking Alpha has requested comment from Boeing (BA) about the future of the Starliner program.

Weighing Next Steps

Mark Nappi, the Boeing (BA) official in charge of the Starliner program at the company, said in an internal message on Saturday that staff would gather on Monday to evaluate next steps.

“I know this is not the decision we had hoped for, but we stand ready to carry out the actions necessary to support NASA’s decision,” he said. “The focus remains first and foremost on ensuring the safety of the crew and spacecraft.”

NASA in 2014 picked Boeing (BA) and SpaceX to build spacecraft to ferry astronauts to and from the ISS. According to the fixed-price contract, NASA was to pay Boeing (BA) as much as $4.2 billion to build the Starliner, followed yearly flights that carried crews of four into orbit.

Amid cost overruns and delays, Boeing (BA) had written off $1.6 billion in Starliner costs. The company faces possibly hundreds of millions of dollars in costs to launch another crewed test flight that NASA may require.

BofA’s Epstein said in the report Monday that he’s concerned about comments made by Steve Stich, the program manager for NASA’s commercial crew program, about discussions with Boeing (BA) about the Starliner’s ability to get back to Earth safely.

“I don’t think it’s a trust issue. I think we’re looking at the data and we view the data and the uncertainty that’s there differently than Boeing (BA) does,” Stich said. “It’s not a matter of trust, it’s a matter of technical expertise and our experience that we have to balance.”

The difference in opinion “suggests gaps in Boeing’s (BA) technical workforce and supports our view that the company has strayed from its strong engineering foundations,” Epstein said.