Boeing Stock Jumps on Good News About 737 MAX Production

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Boeing

CEO Dave Calhoun said 737 MAX production is going up and investors are happy about the comment.

Calhoun said the MAX production rate would be rising soon, according to Bloomberg, at the company’s annual meeting of shareholders.

Boeing

(ticker: BA) stock was up 1.3% at $207.80 in midday trading Tuesday. Shares are up about 2% since Calhoun spoke. The S&P 500 and Dow Jones Industrial Average were down about 0.2% and 0.3%, respectively.

Boeing didn’t immediately respond to a request for comment from Barron’s.

MAX production has been a focus for investors for a while. Wall Street expects Boeing to deliver about 430 MAX jets in 2023, but to hit that mark Boeing will have to produce north of 35 jets a month, up from a rate of about 31 a month currently. Investors have been worried that 430 jets isn’t doable. Boeing delivered almost 390 MAX jets in 2022.

The reasons for investors’ doubts are real. For starters, supply-chain problems have been a headwind for the entire aerospace industry, partly because of labor. Experienced employees left the aerospace value chain during the pandemic. Younger worker have stepped in but they, frankly, are a little slower at this point.

That dynamic has constrained engine production at

General Electric

(GE) and

Raytheon Technologies

(RTX). GE makes MAX engines in its joint venture with

Safran

(SAF.France). Raytheon makes engines in its Pratt & Whitney division. It has been struggling to get engines to

Lockheed Martin

(LMT) for the F-35 fighter jet.

Boeing also was forced to halt delivery of some MAX jets due to a supply quality issue about a week ago. Calhoun’s comments are also a hint that delay will be measured in weeks, not months.

Boeing stock is up about 15% over the past 12 months, about 20 percentage points better than the S&P 500. Investors are optimistic the recovery in commercial air travel, off pandemic-induced lows, will continue.

They will get another chance to hear from management when Boeing reports first quarter numbers on April 26.

Write to Al Root at [email protected]