Boeing 737 Max in China
Boeing (BA) shares could soon rise market analysts say, pointing to the fact that the Civil Aviation Administration of China has issued an airworthiness directive for Boeing 737 MAX aircraft. Boeing has about 105 aircraft ready for delivery to China.
China was the first country to ban Boeing 737 Max flights after the second of two fatal crashes more than two years ago.
Meanwhile, China is the largest global market for Boeing, according to Boeing's website, China accounted for about 20% of the company's shipments before the global 737 Max ban.
About one-third of Boeing's roughly 370 Max aircraft in stock are destined for Chinese airlines, according to Boeing chief financial officer Brian West.
Boeing shares rose 7.5 per cent on Thursday, offsetting Wednesday's sharp fall on news of a new COVID Omicron strain. Boeing shares have fallen 7.3 per cent so far this year.
Boeing's stock gains have long been held back by the grounding of the world's most popular Boeing 737 MAX aircraft, and continue to be held back by the coronavirus pandemic.
US authorities have approved the return of the 737 MAX to service at the end of 2020. The MAX planes have been flying again without incident in the US, Europe and elsewhere for about a year.
The longer period of banning these American planes in China has been attributed by some analysts to the strained political relationship between the countries. The latest moves by the Joe Biden administration to improve relations with China may have benefited Boeing.
Chinese domestic airlines must now complete modifications to the aircraft (downloading new flight control software), pilot training and other work before the 737 Max can return to service, the China Civil Aviation Administration said in a briefing Friday.
Boeing estimates Chinese airlines will need 8,700 new aircraft worth $1.47 trillion by 2040. Moreover, Boeing predicts China's demand for wide-body aircraft by 2040 could amount to 20 percent of its global supply.
There is no specific date for the final re-certification, but China's aviation regulators told reporters on Friday that approval could be granted before the end of the year. That means MAX deliveries to that country could resume in the first quarter of 2022. Boeing CEO Dave Calhoun made similar statements on 27 October.
"This is good news," Olivier Andries, CEO of French engine maker Safran SA, said at a press conference in Paris on Thursday in response to China's action.
