The NTSB is reportedly satisfied with Boeing’s proposed fixes to the troubled MAX jet. Yet shares of the aerospace giant are down 2.5%.
Stephen Brashear/Getty ImagesBloomberg reported that the National Transportation Safety Board says Boeing’s proposed fixes for the troubled 737 MAX jet are adequate. That’s good news for the company, but the stock is lower.
The NTSB is a government agency that conducts independent aviation accident investigations. It looked into both Boeing (ticker: BA) 737 MAX accidents and made seven recommendations in September 2019 following two tragic MAX crashes. Recommendations focused in on three areas: assumptions about pilot response to unforeseen circumstances, pilot training as well as improving pilot alert systems.
Boeing stock is down 2.5% to $163.29 in Friday afternoon trading.
Boeing listening to government oversight is a good thing, but details of the letter weren’t available. Boeing referred Barron’s to the NTSB and the agency wasn’t immediately available to comment.
The MAX has been grounded since mid-March 2019 following two deadly crashes inside of five months which killed 346 people. Boeing has been working for months on fixes and hopes to return the jet to commercial service by the end of 2020.
Investors might be surprised by today’s share-price action. Boeing stock is down, while the S&P 500 is down 0.2% and the Dow Jones Industrial Average is off 0.5%.
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The report doesn’t change many critical assumptions on Wall Street. Most investors and analysts expect the MAX to come back eventually.
Return to service has taken longer than Boeing management initially expected, but there have been other signs of recent progress. Regulators have conducted MAX flight tests recently.
Within the U.S., the final decision to unground the jet is made by the Federal Aviation Administration. Each country, or region in the case of Europe, has its own decision to make, although global aviation regulators work in collaboration with one another.
Investors will likely get another update on MAX timing when Boeing reports third-quarter numbers in October, unless regulators act before then.
Covid-19 has been an even larger factor for Boeing and the commercial aerospace industry than the MAX. Boeing and Airbus (AIR.France) shares are down about 50% year to date. Airline shares in general are off roughly 40% and aerospace supplier shares that Barron’s tracks are down by about a third. The pandemic has wiped out hundreds of billions of dollars of market value from the space.
Write to Al Root at allen.root@dowjones.com
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Boeing Gets Good 737 MAX News, but the Stock Is Sliding - Barron's
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