Boeing Could Face Another Test on 787. Investors Need ‘D’ for Deliveries.

Text size

Boeing

investors could use a bit of good news, but they don’t seem to be getting any.

The latest is the assertion that the airplane maker failed to complete the regulatory paperwork that it needs to start delivering its twin-aisle 787 jets.

Boeing

(ticker: BA) is pushing back on the contention, which Reuters reported Sunday, citing two unnamed sources.

“We have submitted the certification plan and continue to have a transparent dialogue and work closely with the FAA on the remaining steps,” a company spokesman told Barron’s in an emailed statement Monday.

Boeing sounds confident about its filing—and back-and-forth with the Federal Aviation Administration is par for the course in commercial aerospace.

What shareholders need to realize is that government scrutiny usually translates to more stock volatility and more data points to digest.

Veteran analyst Rob Stallard, of Vertical Research Partners, likens the problem—if there is one—to “submitting your homework [one] minute before the deadline.” And he thinks it’s simply too early to tell whether Boeing faces an additional delay in deliveries of the jet.

The risk that shareholders face, too, is another lag in Boeing getting the 787 to new customers. Deliveries have been on hold for months after Boeing was notified by a supplier of certain weak parts. The company determined that the parts didn’t pose a safety concern for jets already in the air.

Wall Street expects 787 deliveries to resume in this quarter, although the number forecast to be delivered is relatively low—11. The company delivered 48 in the second quarter of 2019, before the quality problem came to light and before the pandemic slammed air travel and demand for planes.

In midday trading, the stock was down 0.8% after starting the trading day up 0.7%. The

S&P 500
was down 0.7%. The

Dow Jones Industrial Average
was down 0.4%.

The stock already reflects a lot of bad news. Shares are down about 37% so far this year and about 51% below their June 52-week high of more than $258 a share.

Airbus

(AIR. France) shares are down about 13% from their 52-week high.

The FAA is keeping a close eye on Boeing. The agency grounded the company’s 737 MAX jet between March 2019 and November 2020 after two deadly crashes within five months. China still hasn’t recertified the MAX for commercial operations. That process has taken longer than investors expected.

Restarting 787 deliveries could help convince investors the worst is behind the company.

Shareholders get another bit of good news this week if Boeing’s space capsule, called Starliner, can complete an uncrewed test flight Thursday. The test was scrubbed in 2021 after a valve problem was discovered.

Write to Al Root at [email protected]