Quiver Quantitative - The year 2023 marked a significant milestone for Boeing (NYSE:BA) as the company announced the complete return of all its 737 MAX jets to service within Chinese airlines. This development is especially notable considering the global grounding of the 737 MAX model in 2019 following fatal crashes in Indonesia and Ethiopia. The aircraft re-entered service globally starting late 2020, but it was only in January 2023 that Chinese airlines recommenced their operations with this model.
Boeing China CEO Liu Qing confirmed on social media that all China civil aviation 737 MAXs, amounting to nearly 100 planes, had resumed operations. This progress suggests positive momentum in Boeing's efforts to mend its strained relationship with China, not only due to the MAX crisis but also amidst ongoing U.S.-China political tensions. Resuming deliveries of the 737 MAX to China, which had been halted since 2019, would represent a significant financial and strategic win for Boeing, enabling it to finally deliver and receive payment for numerous Chinese MAX planes currently in its inventory.
Market Overview: -All Boeing 737 MAX jets operated by Chinese airlines are back in service, marking a significant milestone after the 2019 grounding. -The return paves the way for potential delivery resumption, a financial and diplomatic boon for Boeing. -New safety checks follow reports of a loose bolt issue, but airlines like Ryanair (NASDAQ:RYAAY) and Southwest report no issues found.
Key Points: -Nearly 100 MAX jets operated by Chinese carriers are now flying, signifying the model's full reintegration into China's airspace. -Renewed deliveries would boost Boeing's financial bottom line and mend its strained relationship with China, impacted by the MAX crisis and trade tensions. -Boeing recently delivered a 787 Dreamliner to China, hinting at a possible MAX thaw as well. -A new safety concern regarding a loose bolt prompts inspections for airlines globally, but initial reports indicate no widespread problems.
Looking Ahead: -Boeing's China prospects hinge on securing MAX delivery approval and navigating potential safety concerns. -Closer U.S.-China relations could facilitate increased business opportunities for Boeing in the world's second-largest aviation market. -Continued vigilance toward aircraft safety remains paramount for both Boeing and airlines worldwide.
The company's recent activities, including conducting preparatory activities and flight tests on several 737 MAX jets for Chinese customers, have fueled speculation about the potential resumption of MAX deliveries to China. This prospect gained further credibility following Boeing's direct delivery of a 787 Dreamliner to China in the same week, the first since 2019, and the delivery of eight 777 freighters to Chinese customers through November.
However, Boeing is also dealing with a recent safety issue. The company instructed airlines to inspect all MAX planes for possible loose bolts in the rudder control system after finding hardware issues on two aircraft. Major operators of the 737 MAX, including Ryanair (RYA), Southwest Airlines (NYSE:LUV), and FlyDubai, have conducted inspections with no significant operational impact reported. Ryanair and Southwest Airlines confirmed no issues, while FlyDubai, operating an all-737 fleet, is completing inspections without expecting any disruption to their scheduled operations.
This article was originally published on Quiver Quantitative