Military
Is This the News That's Propping Up Boeing's Share Price After Earnings?
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Shares of Boeing Co. (NYSE: BA) traded up about 1.5% at noon on Wednesday, following the company’s third-quarter earnings report. The uptick has more to do with the first delivery of a new jet engine than with any new information about a resolution to the company’s efforts to get its 737 Max recertified and back in the air.
General Electric Co. (NYSE: GE) last week reportedly delivered the first flight compliant GE9X jet engine to Boeing’s Everett, Washington, facility. The GE9X is the largest (by fan size) engine ever built and is destined for Boeing’s new 777X family twin-engine, dual-aisle commercial planes.
Eight of the new engines were delivered to Boeing earlier this year, but four were recalled to redesign turbine vanes that deteriorated more quickly than expected after being exposed to higher-than-intended temperatures in the engine’s compression chamber. Test flights of the 777-9 that were scheduled to begin in July have been postponed until early next year.
Neither GE nor Boeing would confirm the delivery, according to a report at Aviation Week, because doing so starts the clock running on the flight test program. A second engine is expected to be delivered by the end of October, and Boeing engineers are expected to install the two engines on the first 777-9 test aircraft by mid-November.
Boeing has been so focused on getting the bread-and-butter 737 Max back in the air that flight tests that might have occurred by the end of this year, even with the late delivery of the engine, have been postponed. In July, Boeing CEO Dennis Muilenburg commented, “While we continue to target 2020 for first delivery of the 777-9, the engine issue is adding significant risk to the schedule.” That’s code for, “This delay is costing us a bundle.”
Muilenburg appears to have learned that keeping quiet about costs is prudent when your company is being raked over for cutting corners at the expense of 346 lives.
Boeing should be prepared for intense scrutiny by civil air authorities that likely will be reluctant to accept the U.S. Federal Aviation Administration’s certification at face value after the 737 Max crashes. Delaying deliveries of the 777X into early 2021 may be optimistic.
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