The crash of a China Eastern Airlines flight on Monday piles on the woes for an industry that’s still struggling with 200 billion yuan (US$31.4 billion) of losses from a pandemic-led slump. Rescue efforts for the 132 passengers and crew aboard flight MU5735 were ongoing in the city of Wuzhou in Guangxi province on Tuesday, as President Xi Jinping demanded an all-out search for survivors and an investigation into safety issues in the civil aviation industry . The accident sent ripples through financial markets on Tuesday. China Eastern shed 6.2 per cent in Shanghai and 2.6 per cent in Hong Kong. A gauge tracking major Chinese airlines compiled by financial data provider Wind Information fell 1.5 per cent. Boeing, the manufacturer of the seven-year-old 737-800 aircraft that crashed, fell 3.6 per cent in New York overnight. China Eastern has grounded all its 737-800 flights. An investigation into the cause of the crash was ongoing, the carrier said in a statement on Monday. The incident comes as China’s aviation industry is already struggling under the weight of a resurgence of Covid-19. China’s first fatal aviation tragedy since 2010 could heap more pressure on carriers trying to return to profit. “The air disaster has been a huge shock to the public, and some people may start to think that air travel is not safe and some may avoid taking a flight,” said Lei Zheng, founder and president of the Institute for Aviation Research. “It will further drag on sluggish demand.” The industry was already under pressure from the Civil Aviation Administration of China (CAAC) to turn a profit this year, provided the domestic Covid-19 situation remained relatively stable. The sector, including airlines and airports, suffered losses of 211 billion yuan between the start of the pandemic and February this year, according to data from the CAAC. The authorities’ scrutiny of airlines’ safety controls – already among the strictest in the world – is certain to increase in light of the incident, bringing additional costs for carriers hit by the prolonged pandemic. “Given the recent surge of oil prices and airlines’ losses in the past two years, their losses will further rise,” said Lei. The other two big state-owned airlines were mixed in the stock market on Tuesday. China Southern Airlines rose 2.2 per cent in Hong Kong, just shy of the wider market which jumped 3.2 per cent. It fell 0.9 per cent in Shanghai, where the benchmark index climbed 0.2 per cent. Air China rose 1.4 per cent in Hong Kong and dropped 0.3 per cent in Shanghai. “Most of the investors consider this an individual incident on a single airline,” said Li Hanming, an independent aviation consultant at Li & Li consultancy. Consumer sentiment is likely to be fragile in the months or even years before investigations into the cause of the accident are complete, according to aviation analysts. “Before the final [investigation] result is confirmed, it’s hard to evaluate the impact on China Eastern. If the carrier has some operation and management problems it will face lawsuits and heavy punishment from regulators,” said Sun Yan, an analyst at Essence Securities in a report on Tuesday. “If it’s the problem of the plane manufacturer or other reasons, the impact on airlines will weaken.” Sun predicted smaller carriers – such as those with state investment – will face the dual burden of more safety reviews and meeting the target of returning to profit. “We don’t exclude the chance that mergers and acquisitions of medium to small carriers will accelerate, and the dominance of top-tier airlines could be intensified.”