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In China, the Boeing 737 MAX has yet to be recertified for commercial operations.
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Boeing
The Boeing 737 MAX could be returning to Chinese skies shortly. Even if the stock hasn’t reacted, this is positive news. According to Bloomberg, Chinese aviation regulators are open to new ideas.
Boeing
737 MAX test flights (ticker: BA). This is a positive move for the MAX, which has yet to be recertified for commercial operations in China.
Despite the positive news, Boeing’s stock hasn’t moved much. Friday’s closing price was $239.59, up 1.2 percent from the previous day’s close and much in line with the overall market. The
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End the session with a gain of 1.1 percent and 1.3 percent, respectively. Boeing declined to comment on Chinese regulatory reviews, but stated that it works closely with international regulators. One explanation for the lackluster response is that China isn’t a big market for the MAX, which was grounded worldwide for five months between March 2019 and December 2020 due to two fatal crashes linked to a software fault in the plane’s flight control system. According to Boeing’s commercial website, the company has over 4,000 unfulfilled 737 model aircraft orders, the great majority of which are for MAX jets. Only about 200 MAX planes have been ordered by Chinese carriers, which is a small percentage of the total. The main reason investors aren’t reacting to the Chinese news is that they’re preoccupied with other issues. Recertification of the Chinese MAX is perhaps the third or fourth most essential thing for investors these days. Number one is the overall recovery in commercial aerospace as the Covid-19 pandemic eases. Commercial air travel in the United States fell by around 20% in July compared to the same month last year. When compared to pre-pandemic levels, plane travel was down nearly 40% three months ago. Things are starting to look up.
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The second concern for investors is the safety and delivery of MAX jets: The MAX has returned to the United States and Europe. More MAX planes are being taken and ordered by airlines. Since the plane was recertified to fly in the West, Boeing has signed orders or letters of intent for around 600 jets. The 787 is another issue. Boeing is also deferring delivery of its 787 planes while it works to resolve a quality issue. That, as well as Boeing’s debt levels and future jet development, are all more important than the Chinese MAX’s re-certification. The MAX may not matter much in China right now, but the world’s second-largest economy is a key market for Boeing in the future, as the company hopes to sell more planes to Chinese buyers. Al Root can be reached at allen.root@dowjones.com./n
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