With The Resumption of 787 Deliveries, Boeing’s Stock Surges

Investors in Boeing received two pieces of positive news on Monday, which contributed to the stock moving higher. One of the items was far more important than the other.

The aircraft manufacturer was able to avert a strike at three sites that produce military equipment for the time being, and the United States regulatory authorities gave their blessing to the company’s plan for approving repairs to the 787 twin-aisle airplane.

The fact that the strike was avoided is a minor victory. Investors will feel a significant sense of comfort once 787 deliveries can get back on track.

On Monday, the price of a share of Boeing (ticker: BA) shares increased by 4.1 percent, reaching approximately $165.80. The stock was trading almost 21 percent lower going into today’s session, whilst the S&P 500 SPX +0.20 percent and the Dow Jones Industrial Average DJIA +0.14 percent had both dropped approximately 13 percent and 10 percent, respectively.
Since the beginning of 2016, Boeing has not delivered any 787 airplanes to customers. The final shipment took place in June of 2021. Following the discovery of quality issues during production, Boeing suspended further deliveries of the aircraft.

According to sources, the Federal Aviation Administration gave Boeing the green light over the weekend to begin delivering the 787 Dreamliner to customers. Aviation Week was the first publication to break the news on the approval from the FAA.

A spokesperson for Boeing stated in a recent interview that the company “will continue to work transparently with the FAA and our customers towards resuming 787 deliveries.” The FAA gave the certification proposal their stamp of approval. Before the airplanes can be sent on their way, there are a few more tasks that need to be completed.

Nevertheless, the permission is a significant step toward making it possible for Boeing to deploy some 120 jets that have been built but have been stored. It will take some time before all of those jets are delivered, but the clearance may indicate that there is room for growth in Boeing’s profitability predictions for the remaining part of 2022.

Advertisement

Wall Street analysts now anticipate that Boeing will deliver approximately eighty five 787 airplanes to customers this year. Meanwhile, a strike at three Boeing plants in the St. Louis area was supposed to begin on Monday, but it has been postponed for a few days after the International Association of Machinists and Aerospace Workers got a fresh contract offer from the multinational aerospace corporation.

After taking into account the normal discounts, Benchmark analyst Josh Sullivan stated on Monday that the undelivered backlog represents $20 billion in sales. He considers the approval to be positive news and gives the Boeing shares a Buy rating. His objective price for each share is $200. According to a story in The Wall Street Journal, Boeing’s proposed three-year contract will provide new employees with a one-time payment of $8,000, and the business will no longer reduce its contributions to employees’ 401(k) savings plans as had been previously planned. The deadline for proposals has been extended to Wednesday, but if the plan is not accepted, a strike might start on Thursday.

A contract offer made by Boeing was turned down by approximately 2,500 of the company’s employees who are represented by the International Association of Machinists and Aerospace Workers District 837 last week.