Boeing (BA) Poised to Deliver First 737 Max to China Southern
After reportedly struggling with supplier Spirit AeroSystems Holdings, Inc.’s SPR inability to resolve the improperly drilled holes on aft pressure bulkheads of the 737 Max, aerospace giant The Boeing Company BA seems to have finally made a breakthrough and is on course to meet its delivery target in China.
Earlier, Boeing had said that the aforementioned defect might delay near-term deliveries and that it was evaluating whether it would miss its annual delivery target of at least 400 737 Max’s this year. However, per reports, Boeing is resuming sales of its 737 Max to China, with China Southern Airlines Co., the country’s largest carrier, poised to take the first aircraft soon.
In June 2023, Boeing and China Airlines had also finalized an order for eight 787-9 Dreamliners at the Paris Air Show. The Taiwan-based China Airlines became the newest 787-10 customer, as it intended to convert six 787-9s to the 787-10, the largest member of the 787 family. Boeing has been making rapid strides in the region.
These developments have followed the significant lifting of a ban on the 737 Max by Chinese officials earlier this year. The ban was in place since March 2019 following a couple of fatal Max crashes. However, it now seems China and its neighborhood is a reinvigorated market, if not new, for the planemaking major to operate in.
Boeing has very recently appointed Alvin Liu as its China head of operations. “I am honored and excited for the opportunity to help expand on the incredible, 50-plus-year foundation of success and partnership that Boeing has built in China,” Liu said in a release. “Nearly 8,500 new airplanes, and $550 billion in commercial services, will be needed over the next 20 years in China and I am committed to making sure our team is ready to support our customers and meet that demand.”
Boeing is part of the Zacks Aerospace - Defense industry. Since the beginning of the year, this planemaker’s stock has gained 19.2% compared to the industry’s 10.4% decline. However, the price has been on a steady fall since July after the issues with its supplier and the manufacturing defect on the 737 Max came to light. Prices shot up again once the developments from China were reported.
For the current year, its estimated earnings growth is 82.1%. For 2024, it is projected at 350.7%. Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boeing has been having a steady year with China opening up and international travel picking up. Fuel prices coming off their 2022 peak have also helped. What has certainly not helped is its manufacturing contract with Spirit. However, with great news coming in from the China region, it will be interesting to follow how 2023 ends up for the planemaking behemoth.
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