President Trump’s trade war tactics appear to have backfired, as evidenced by the spiraling performance of the Dow Jones Industrial Average. While most Dow components are trading in the red, there are some winners, and an unlikely hero is leading the charge. Boeing (BA), which is under fire for the fallout related to its 737 MAX planes, is managing to rise above the fray, adding more than 1 percent and outperforming all 29 of its index peers. Other Dow gainers include McDonald’s, Coca-Cola, and Walmart though none of them is particularly killing it.
So why are investors rewarding Boeing considering that the company is mired in controversy and at risk of losing even more customers to its chief rival Airbus? The aerospace giant is making progress on the changes to its MAX planes, and it’s precisely what the market wanted to hear. Boeing’s 737 MAX is the model that was involved with two catastrophic plane crashes last year.
Now Boeing is reportedly overhauling its 737 MAX “automated flight control system’s software,” according to a report in the Seattle Times. The changes involve receiving data from a pair of flight-control computers vs. just one. Former Boeing employee Peter Lemme is cited in the publication as saying:
“This is a huge deal…I’m overjoyed to hear Boeing is doing this. It’s absolutely the right thing to do.”
If the changes fly with regulators, the MAX planes could be back in the air as soon as October, which is giving investors reason to celebrate. The development couldn’t have come too soon, as Boeing MAX customers such as Ryanair feeling the heat. Ryanair has been laying off employees and has also slashed the number of MAX planes it expects to receive over the next year nearly in half with the possibility of lowering orders further. Other customers aren’t planning on taking any MAX planes until at least 2020.
Meanwhile, though Boeing is helping, its gains aren’t enough to propel the Dow into positive territory to end the week.
Last modified: June 23, 2020 2:39 PM UTC