Boeing (NYSE: BA) received a massive order for one of its most important customers and could be in for a windfall as the U.S. tries to repair relations with China. The combination has investors taking a fresh look at the aerospace giant, sending shares of Boeing up about 4% as of 10:30 Eastern on Monday.
Boeing investors have been flying through turbulence for years now. The stock was hit first by the grounding of the 737 MAX following a pair of fatal crashes, then by the pandemic and its impact on airlines.
Both of those problems are now in the past, but the aerospace giant has struggled to get airborne again. Its 777X has been plagued with delays that have led key customers to question the viability of the program, and the MAX has remained grounded in China even after it resumed flying elsewhere.
Boeing investors woke up on Monday to good news on both fronts.
Emirates, which is already responsible for nearly one-third of the 777X order book, announced a $52 billion order for 95 additional jets. And China is reportedly weighing allowing the 737 MAX to return to domestic operations as part of a meeting between presidents Joe Biden and Xi Jinping scheduled for Wednesday.
Both of Monday’s news items offer more reassurance than surprise, but they are both significant developments. Despite Emirates’ complaints about 777X delays, the airline was always expected to remain an important customer, and the revised order serves as confirmation it is still on board.
Similarly, China’s hold on the 737 MAX has been widely viewed as a political negotiating tactic that will eventually be lifted.
Boeing is on the mend after a difficult few years, and its shares remain down more than 50% from their 2019 highs before the trouble hit. For patient investors, this could be a buying opportunity.
It will still be years before Boeing is able to ramp up to the production levels it targeted before the pandemic, and Boeing continues to navigate through supply chain problems that are affecting production rates. The company took on billions in added debt to survive the pandemic and will need years to pay down its borrowings and resume normal operations. Economic headwinds and labor concerns could further delay its progress.
Boeing appears on track to reach its targets but will need time to get there. Investors buying in today have reason for optimism but will need to keep their seat belts fastened.
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