Investors welcomed a double upgrade in the outlook for Boeing on Tuesday, sending the aerospace company’s stock sharply higher, while triggering a big share drop in Canada’s Bombardier.
Shares in Boeing surged 2.4% to $359.87, the highest level since January after JPMorgan upgraded the stock to “overweight” from “neutral”. Boeing stock soared 4.2% on Monday, the day the company said its 737 MAX, the aircraft involved in the Ethiopian Airlines disaster, could safely fly after an early analysis by Boeing.
The Kenyan crash of an Ethiopian Airlines 737 MAX – as it happened Read more
Airlines are already keen to pick up Boeing 737 MAX jets, which have been the subject of delays and cancellations in the wake of the deadly Ethiopian Airlines crash on Sunday, which killed 157 people. Airlines, countries and leasing companies have demanded access to flight data, data-gathering solutions and other information from the aircraft maker.
Boeing will have to provide documentation by 31 March in order to obtain operating certificates in a few weeks, said Safe Airlines a Boeing leasing company.
The upgraded forecast from JPMorgan analyst Jason Gursky was based on the fact that the 737 MAX is expected to be substantially safer than any Airbus aircraft built over the last few decades, “even with lingering operational and maintenance concerns”.
Gursky, who cut his price target on Boeing’s stock to $460 from $489, said that Boeing’s current “general crisis management and safety protocol” will “clear the way for recovery from a near-term dent in sales growth”. He maintains his “overweight” rating on the stock.
Meanwhile, as the Ethiopian Airlines crash intensified tensions between China and Canada, Bombardier dropped 5.7% to $1.48 and Wilfrid Laurier University was sharply lower.
The issue of air safety has become a sticky one in Canada, as last month Bombardier announced plans to cut about 5,000 jobs, about half of them in Canada, after new regional routes in northern Quebec were killed in an air crash. The Quebec government in January extended a $372.5m loan package in an effort to help the company make the new jet.
Canada’s transport minister, Marc Garneau, said Bombardier made the decision “in the interest of the company”.
China’s commerce ministry has launched an investigation after the crash in Ethiopia, which was the second involving a Boeing 737 MAX in five months. China’s aviation regulator banned the plane in all its airspace.
Donald Trump’s comments on why he doesn’t like @Boeing, war on cronies and imaginary losers haven’t made a single little bit of difference YELP (@Yelp) March 5, 2019
JPMorgan’s Gursky on Tuesday also said he was optimistic about Boeing’s prospects in the business jet market, which fell in the fourth quarter of 2018 after hitting an all-time high in 2017. He lifted his price target on Boeing’s stock to $600 from $550.
United Airlines, which has a large fleet of widebody jets including the Boeing 777 and Boeing 787 Dreamliner, is considering adding Boeing 737 MAXs to its fleet for its routes to China. United is the world’s largest domestic airline and also a major global jet provider.
China and the United States were also involved in a spat about Trump’s tweets critical of Boeing over jetliners made by Brazil’s Embraer SA.