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Why Boeing Stock Just Popped

By Rich Smith – Dec 2, 2021 at 5:58AM

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China moves toward recertifying the 737 MAX.

What happened

Shares of aerospace titan Boeing (BA 1.48%) soared on Thursday after The Wall Street Journal reported that the Civil Aviation Administration of China (CAAC) may soon permit Boeing's 737 MAX airliner to resume flying in that country.  

Up nearly 5% earlier in the morning, as of 10:30 a.m. ET, Boeing shares are still hanging onto a 3.3% gain.

Frontal view of a Boeing 737.

Image source: Getty Images.

So what

This isn't entirely news. Two weeks ago, Bloomberg first reported Boeing head of commercial airplanes Stan Deal predicted China might soon let the 737 MAX fly again. But more than just wishful thinking, today's report is on a concrete action by the CAAC, moving in the right direction.

According to the Journal, the CAAC has instructed Boeing on specific software it wants installed in 737s operating within China, and on changes that should be made to the airplane's flight manual, "among other changes."

That may sound like the list could be longer than it appears, but whatever the "other changes" might be, they appear to constitute a complete list, and "the corrective actions are adequate to address this unsafe condition," confirmed the CAAC.

Now what

Granted, the CAAC made no promises on how long, after the changes are made, it will take China to recertify the 737 MAX to fly. One wouldn't expect China to delay too long, however, as most countries around the globe have already recertified the plane.

Once the changes are made, therefore, it should quickly open the door to China permitting the 100-odd 737 MAX planes already owned by Chinese airlines to resume flying -- and for Boeing to resume deliveries of the "hundreds more" MAXes still on order in China. Investors are probably also hoping that recertification will spark new orders to buy the plane -- and other Boeing jets -- after a roughly four-year drought of orders from China.

In short: Open the floodgates, because a tsunami of Chinese cash could soon be flowing to Boeing.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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