Boeing (BA 1.81%) got good news out of China and an upgrade from Wall Street on Wednesday. The stock gained altitude as a result, and was up by about 5% as of midday.
Boeing has flown through a lot of turbulence in recent years -- some of it of the company's own making. The 737 Max, which at one point was thought to have the potential to become the best-selling passenger plane of all time, was grounded for nearly 18 months after a pair of fatal crashes. By the time the issues that led to those accidents were addressed and the jets were cleared by regulators to fly again, the pandemic had tanked air travel passenger volumes and airline revenues, leading to lower demand for new aircraft.
But on Wednesday, the head of Boeing's China operations told Reuters that a 737 Max test flight for Chinese regulators last month had been a success, raising hopes that China's ban of the plane will be lifted before year's end. China is the largest market that has yet to recertify the 737 Max to operate.
Bernstein analyst Douglas Harned also chimed in, asserting that the worst is over for the airlines. Harned upgraded Boeing, along with rival Airbus (EADSY 2.45%) and supplier Spirit AeroSystems (SPR 3.54%), saying that while the Boeing story is "not totally clean," we've finally hit the inflection point for global travel and capacity trends look promising.
Boeing is indeed airborne again, but investors should keep their seat belts fastened. Airlines are seeing trends moving in the right direction, but the carriers right now are more focused on rebuilding their balance sheets and less interested in buying new airplanes. Most large orders for new jets announced this year have come at major discounts.
I believe it will be a while before Boeing has pricing power again, especially with its traditionally more lucrative widebody international airframes. While the worst may be over for the 737 Max, Boeing is still fighting pesky design problems with its 787 Dreamliner, and the introduction of the next version of its 777 has been delayed.
Boeing stock has slowly recovered from the lows it touched early in the pandemic. The share price can climb further from here, but it might be a long time before it really takes off again.