Boeing took another step to manage through the Covid-19 pandemic, extending the suspension of operations at Puget Sound-area and Moses Lake sites. One thing that hasn’t stopped, however, is work on 737 MAX recertification.
The MAX—the company’s newest single-aisle jet—has been grounded worldwide since mid-March 2019 following two deadly crashes inside of five months. Boeing (ticker: BA) has been working for months alongside global aviation authorities to bring the plane back into commercial service. Before the Covid-19 crisis hit, the company expected the plane to fly again by the middle of 2020.
But the virus has disrupted the entire aerospace industry. More than half the commercial jet fleet is grounded. About 13,650 jets are parked compared with 12,635 still flying.
“The health and safety of our employees, their families and our communities is our shared priority,” Boeing Commercial Airplanes CEO Stan Deal said in a Sunday news release. “We will take this time to continue to listen to our incredible team and assess applicable government direction, the spread of the coronavirus in the community and the reliability of our suppliers to ensure we are ready for a safe and orderly return to operations.”
Boeing first suspended production at Puget Sound sites on March 23. Since then, the company has also suspended operations at a Philadelphia facility that makes H-47 Chinook and V-22 Osprey for the defense industry.
“Our teams are working virtually where we can, while taking precautions to ensure a safe environment for all of us,” a Boeing spokesman told Barron’s in an emailed statement. “We are continuing to make progress on our [MAX] certification efforts and are collaborating with regulators to address their requirements.”
The drop in air traffic demand might have reduced the urgency airlines feel to have the MAX integrated back into their fleets. But Boeing still has more than 4,300 orders for its new jet.
The MAX grounding weighed heavily on Boeing stock. Shares dropped about 35% from March 8, 2019—the last trading day before the second tragic MAX crash—to the end of February 2020. Aerospace suppliers Barron’s track were flat over the same span, not too different than comparable returns of the Dow Jones Industrial Average and S&P 500.
Since March—when coronavirus cases spread across the globe—Boeing and aerospace stocks have by another 54% and 46% respectively.
The declines since March shows that investors expect a deep downturn in air travel. Wall Street analyst don’t expect traffic to return to 2019 levels for years.
Write to Al Root at allen.root@dowjones.com
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April 06, 2020 at 02:08PM
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Boeing Extends Seattle-Area Shutdown, Continues Work on 737 MAX Recertification - Barron's
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