Boeing Stock Rises as Strike Temporarily Averted, 787 Cleared for Deliveries

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Boeing

investors got two bits of good news Monday that was sending the higher. One item was a far bigger deal than the other.

The plane maker temporarily avoided a strike at three plants that make military gear, and U.S. regulators approved the company’s plan for validating repairs to the 787 twin-aisle jet.

Avoiding the strike is a small positive. The ability to resume 787 deliveries will be a big relief for investors.

Boeing

(ticker: BA) stock rose 4.1% on Monday to about $165.80 a share. Coming into the session, the stock has fallen almost 21% this year, while the

S&P 500
and

Dow Jones Industrial Average
have declined about 13% and 10%, respectively.

Boeing hasn’t delivered 787 jets in more than a year. The last delivery was in June 2021. Boeing stopped delivering the planes after quality problems were found in manufacturing.

Over the weekend, the Federal Aviation Administration gave clearance to Boeing to begin deliveries of the 787 Dreamliner, according to reports. Aviation Week was the first to report on the FAA’s approval.

“We will continue to work transparently with the FAA and our customers towards resuming 787 deliveries,” a Boeing spokesman told Barron’s in an emailed statement.

The FAA has approved the certification plan. There are a couple of steps to finish up before shipping planes out.

Still, the approval is a big step in clearing the way for Boeing to deliver roughly 120 jets that were built and parked. It will take time for all those jets to be delivered, but the approval could mean there is upside to Boeing earnings estimates for the balance of 2022.

Currently, Wall Street projects Boeing will deliver about 85 of the 787 jets this year. Meanwhile, a strike at three Boeing facilities in the St. Louis area was scheduled to begin Monday, but it’s been put off for a few days after the International Association of Machinists and Aerospace Workers received a new contract offer from the aerospace giant.

Benchmark analyst Josh Sullivan wrote Monday the undelivered backlog represents $20 billion in sales after typical discounts. He believes the approval is good news and rates Boeing stock Buy. His price target is $200 a share.

Boeing’s proposed three-year contract offers new workers a lump-sum payment of $8,000 and removes earlier plans to cut company contributions to employees’ 401(k) savings plans, The Wall Street Journal reported. Talks were extended through Wednesday, but a strike could begin Thursday if the proposal is rejected.

The roughly 2,500 Boeing workers represented by the International Association of Machinists and Aerospace Workers District 837 rejected a contract offer from Boeing last week.

Write to Joe Woelfel at [email protected]