What happened
Shares of Boeing (NYSE: BA) traded 5% on Thursday morning based on progress flying its restless 737 Max again and positive sentiment around the airlines. It has been a difficult year for Boeing shares, but investors today were focused on the potential for better days ahead.
So what
Boeing has been hit hard by COVID-19, which has caused its airlines customers to delay growth plans. But the company had problems ahead of the pandemic, especially a few fatal 737 Max crashes that led to the flight in March 2019.
The COVID-related issues will take years to work out, but Boeing is apparently making progress in getting the 737 Max back in the air. U.S. and Canadian regulators have already conducted flight tests, and the European Union’s Aviation Safety Agency (EASA) on Thursday issued a statement saying it had “worked slowly” to get the Max back as soon as possible.
Image source: Boeing.
While there is still work to be done, EASA said it will conduct 7 test flights from Vancouver, Canada during the week of September 7th. This is an important development, as there were some concerns about the logistics of international regulators conducting test flights due to pandemic-related travel restrictions.
Shares of airlines were also up on Thursday, as part of a broader market rise higher over news of a potentially rapid coronavirus test and remarks by Federal Reserve Chairman Jerome Powell, suggesting the central bank is in no hurry to return from helping of the economy.
Well what
Even if airlines currently do not want to add new aircraft, Boeing will have to desperately fly the 737 Max again. The company spent nearly $ 10 billion in the first half of 2020 through expenses related to the Max program, and Boeing has more than 400 aircraft on its property awaiting delivery due to the ground.
Boeing will need time to process this inventory, but the first step toward delivering supplies, re-inflating cash, and re-establishing more normalized aircraft production is re-certification. The company expects to have the Max in the air again by 2020, and the European announcement is a huge milestone in that effort. That was enough to let the shares fly Thursday.
