A report of good news has turned into actual good news for
Boeing
in a slightly different way than expected.
Thursday afternoon, Boeing confirmed that Juneyao Airlines had taken delivery of a 787-9 Dreamliner. It was Boeing’s first direct delivery of a passenger airplane to China since November 2019.
China hasn’t been taking delivery of new Boeing jets because it simply hasn’t needed the capacity. Zero-Covid policies that shut down portions of the Chinese economy sapped demand for air travel.
But now, things are slowly returning to normal. Air travel in the Asian-Pacific region was up about 90% year over year in October, according to the International Air Transport Association. Traffic is almost at pre-pandemic levels.
Investors have been waiting for deliveries to restart. Wednesday, Deutsche Bank analyst Scott Deuschle wrote that he believed he spotted a 737 MAX headed to China using publicly available flight-tracking sites. Deuschle described it as a predelivery flight, so a delivery could come soon, but the 787 news happened first.
Deliveries restarting is a small bit of good news for Boeing. It’s another sign that things are normalizing after the twin problems of COVID-19 and the worldwide grounding of the 737 MAX between March 2019 and November 2022 following two deadly crashes.
Boeing delivered more than 800 jets in 2018. Deliveries bottomed out at 157 units in 2020. Boeing is expected to deliver 520 planes in 2023, according to FactSet. Wall Street expects about 800 jets to be delivered in 2025.
Investors knew Chinese deliveries would restart eventually, but they didn’t know when. Boeing estimates that China will need about 8,560 new commercial airplanes through 2042 to meet rising demand for air travel. That’s about 20% of the world’s airplane demand over that time frame.
Boeing stock was up 0.6% in late trading Thursday. The
S&P 500
and
Dow Jones Industrial Average
were up 0.9% and 0.7%, respectively.
Through late trading, Boeing stock was up about 34% year to date. Investors have been feeling better about the shares as air traffic has recovered from pandemic-induced lows.
Write to Al Root at [email protected]
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