Market Overview

The government and aviation regulator in Beijing are reportedly considering lifting their four-year ban on Boeing's 737 MAX aircraft delivery. According to Bloomberg the U.S. president Joe Biden and the Chinese leader Xi Jinping could make it a part of a political deal between the two superpowers, as they are going to meet on the Asia-Pacific Economic Cooperation (APEC) summit. The rendezvous in the San Francisco Bay Area is scheduled on November 15.

Officially, White House national security adviser Jake Sullivan highlighted the importance of "managing competition responsibly" so that it does not veer into a conflict. Yet, Boeing-related rumours was enough for the shares of the American aviation giant to take off after so many days of drifting aimlessly to and fro near annual lows. The stock added more than 4 % to its market price at one go to trade above $205 this Monday, which may give it a boost to break a descending trend since mid-August, keeping in mind Wall Street analysts' current median price target of $250, according to LSEG data.

The 737 MAX is a best-selling model of Boeing. Its deliveries to China were banned after two deadly crashes in 2019, when it was grounded everywhere across the world. After rigorous testing, civil aviation authorities in many countries allowed the 737 MAX to fly again, including the U.K. and the EU, as well as Australia, Canada and Brazil. The U.S. was the first country, which lifted the ban in November 2020.

Another good news for Boeing came in the beginning of this week, as the company's management announced secured orders for 125 wide-bodied jets from Emirates airlines and its younger sister flydubai budget carrier at the Dubai Airshow. The latter quickly confirmed an order for 30 Boeing 787-9s, valued at 231 billion dirhams (equivalent of nearly $63 billion). 

A cyclical downturn in the aviation industry, as Boeing was no exception, followed by the destructive influence of the corona pandemic, especially damaging long-haul trips. Many air carriers resumed placing purchase orders at an accelerated pace later on. 

Boeing joined a broader market sell-off on Wall Street this autumn. Besides, the stock nosedived to $176.25 once again after missing consensus estimates on its October 25 report. Boeing published disappointing numbers that day to show a wider-than-expected loss in the period. It posted a loss of $3.26 per share against expected $3.18, also cutting its own guidance for 737 MAX deliveries for the full fiscal 2023 to a range between 375 and 400, down from the previous guidance of 400 to 450, while the company's operating loss at its defence business rose to $924 million, more than twice over the expected $400 million.

That was the company’s 15th earnings line miss out of the past 20 quarters, even though Boeing share price is still about 68% up compared to its lows of autumn 2022, for example. This kind of discrepancy, apparently, still affects the market prices for Boeing shares. Yet, its share price looks resilient in the mid-term, as investors are focusing on better chances to improve Boeing's commercial aerospace segment.

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