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Boeing Co.’s resuming sales of its 737 Max jets to China would be a “significant positive” development for the aerospace and defense company, helping offset the impact of newly disclosed problems with the aircraft family, a Wall Street analyst said Friday.
Bloomberg reported earlier Friday that two aircraft slated for China have been taken out of storage and readied for delivery. The report, which cited people familiar with the matter, said that the handovers are expected “within weeks.”
Boeing stock
BA,
gained more than 2% Friday, and it is ending the week about that much in the red.
Boeing’s 2023 guidance and farther out guidance does not include any deliveries to China, said RBC Capital analyst Ken Herbert. Besides bolstering delivery numbers, the resumption of China sales “could help offset some recent production delays at Spirit AeroSystems,” Herbert said.
“For investors, we believe the focus could increasingly shift to [2025 and 2026] delivery and FCF outlook, as this news could provide more support to the 2025/2026 guidance,” the analyst said.
Boeing and supplier SpiritAeroSystems Holdings Inc.
SPR,
on Wednesday disclosed a new manufacturing problem affecting one of Boeing’s 737 Max models, leading several analysts to say delivery delays at the aerospace and defense company would be likely.
The quality problem is not a flight-safety concern.
China Southern Airlines Co. Ltd.
CHKIF,
600029,
is the likely customer to take delivery of the first Max upon resumption, he said.
As of the end of July, Boeing has 118 unfilled Max orders all destined for China, 34 of which are for China Southern. Boeing also has orders for 25 777 widebody jets as well as as 11 787 “Dreamliner” from Chinese airlines, Herbert said.
Shares of Boeing have gained about 17% in the year to date, compared with an advance of about 15% for the S&P 500 index.
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