Boeing 737 Max Return To Service Picks Up More Momentum – Investor's Business Daily

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A Canadian regulator completed Boeing 737 Max simulator and test flights, a further step in returning the grounded jet to service. Boeing (BA) stock rose.


Transport Canada began test flights Wednesday and told Reuters Friday that it is the first international regulator to complete validation testing of Boeing 737 Max and is now analyzing the results.

Meanwhile, the European Union Aviation Safety Agency (EASA) said Thursday that the agency would start the 737 Max test flights in Vancouver, Canada, the week of Sept. 7.

“While Boeing still has some final actions to close off, EASA judges the overall maturity of the redesign process is now sufficient to proceed to flight tests,” according to the release.

The jet completed the Federal Aviation Administration’s certification flight tests in early July. In August, the agency outlined a proposed airworthiness directive that will require Boeing and airlines to meet certain conditions before the jet can return to flight.

Shares rose 1.2% to 176.26 on the stock market today, after retaking their 50-day average earlier this week, according to MarketSmith chart analysis. Top Boeing 737 Max supplier Spirit AeroSystems (SPR) was up 1.2%, and engine supplier General Electric (GE) climbed 1.8% to 6.59.

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Worst Over For Boeing 737 Max?

The latest test flights have been a long time coming. The Boeing 737 Max has been grounded since March 2019, following a second deadly crash.

CEO Dave Calhoun said during the second-quarter earnings call that he expects approval from global regulators will be obtained in time to support the resumption of deliveries of the jet during Q4.

Carriers have been canceling orders of the 737 Max and deferring deliveries as the coronavirus pandemic has obliterated summer travel.

But analysts say that the aerospace industry has been through the worst of the turbulence. Moody’s raised its global aerospace and defense outlook to stable from negative. Still, it expects “commercial aircraft demand will remain weak into 2023.”

“We forecast operating profit to fall by 42% in 2020 but rise by 72% in 2021, reflecting the second-quarter 2020 trough and resumption of 737 Max deliveries.”

Last week, the Boeing 737 Max received its first order of the year. Polish airline Enter Air ordered two of the jets with an option for two more. Boeing notably called the plane the “737-8,” dropping the “Max” moniker.

But Boeing is still seeing a major 737 Max deficit as customers have canceled 350 orders in the first half of the year.

Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more. 


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