Shares in parcels carrier United Parcel (UPS) dived today after it was revealed that signs of fatigue had been discovered in the cargo plane which crashed earlier this month killing and injuring 40 people.
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Cracks Were Discovered
The National Transportation Safety Board, in its preliminary report into the incident in Louisville, Kentucky on November 4, said it had found evidence of cracks in a key part of the UPS Airlines MD-11 cargo jet involved in the crash.
The incident killed 14 people – three crew members on board and 11 people on the ground, and according to the NTSB, injured an additional 23 people.
The bulk of the left engine pylon, a structural component connecting the aircraft engine to the wing or fuselage, was still attached to the left engine when it separated from the wing. The NTSB said it found evidence of fatigue cracks in the left pylon aft mount lug.
As part of the investigation the NTSB invited the Federal Aviation Administration, UPS, Boeing (BA), General Electric Aerospace (GE), the Independent Pilots Association and the Teamsters Airline Division to be parties in the investigation.
It found that after the plane turned for takeoff on the runway, the left engine and pylon separated. The investigation also determined a fire ignited on the left engine “while it traversed above the fuselage and subsequently impacted the ground.”
Fiery End to Flight
Despite the flames engulfing the left side of the plane, the report revealed the plane cleared the airport fencing but never surpassed 30 feet above ground level. The plane’s landing gear made contact with a UPS Supply Chain Solutions warehouse on the southern edge of the airport property.
The airplane then made impact with “a storage yard and two additional buildings, including a petroleum recycling facility, and was mostly consumed by fire,” the investigation found.
The findings will put further pressure on the UPS share price, which has dropped nearly 24% this year. It also highlights one of the key risks – brand and corporate reputation – which carrier companies and investors face.
Is UPS a Good Stock to Buy Now?
On TipRanks, UPS has a Moderate Buy consensus based on 9 Buy, 8 Hold and 3 Sell ratings. Its highest price target is $122. UPS stock’s consensus price target is $103.40, implying a 9.78% upside.
