What happened
Shares of Boeing (BA 1.03%) rose 3.6% as of 11 a.m. ET on Monday. The move probably comes from a combination of two factors. First, the CEO of France's aerospace giant Safran gave a newspaper interview and told investors the company would make 12,000 hires in 2022 due to his confidence in the aerospace recovery.
Safran is one of the largest aerospace companies in the world, with expected revenue of 15.6 billion euros in 2021. In addition, it's a joint venture partner of General Electric (GE 2.54%) in CFM International, a commercial engine manufacturer with engines on the Airbus A320 NEO and the Boeing 737 MAX. As such, what Safran says matters. It's interesting to note that GE stock and others in aerospace are up today.
Second, it's likely that investors are taking a look at some of the losers on the Dow last year and deciding that now is an excellent time to take advantage to play an aerospace recovery.
Image source: Getty Images.
So what
Safran is a crucial player in commercial aviation, and its spending plans are a vote of confidence in the industry. The conventional wisdom is that flight departures will improve, leading to aftermarket growth, and after that, airlines will start to expand capacity and invest in new planes. Boeing and CFM International are seen as last in line to benefit.
In this context, bullish commentary and accompanying spending plans from Safran are signs that the worst is over for the industry.
Now what
All eyes will be on how commercial flight departures improve in 2022, and specifically for Boeing, how its production plans on the Boeing 737 MAX will fare through the year. Both Boeing and Airbus have been looking to ramp up production in the coming years, and today's vote of confidence from Safran suggests they will.
Aerospace looks like a great sector to invest in as 2022 begins.
