Boeing (BA) Stock Up 14% Yesterday but Down 3% in Pre-market, FAA Confirms 737 MAX Test Flights

UTC by Wanguba Muriuki · 4 min read
Boeing (BA) Stock Up 14% Yesterday but Down 3% in Pre-market, FAA Confirms 737 MAX Test Flights
Photo: Boeing

Boeing (NYSE: BA) stock surged by over 14% yesterday after FAA confirmed that it will conduct many flight maneuvers and emergency procedures on the ill-fated Boeing 737 MAX.

On June 28, the Federal Aviation Administration (FAA) confirmed that it will conduct many flight maneuvers and emergency procedures on the ill-fated Boeing 737 MAX. These tests will enable the agency to assess whether the new changes made on these planes meet all the FAA certification standards. Boeing Co (NYSE: BA) stock spiked on June 29 after the plane manufacturer gained approval from the FAA to start test flights of the aircraft as early as this week. The FAA has been keenly assessing multiple alterations to the 737 MAX’s flight system in the past year.

The authorities gave the manufacturer the go-ahead on June 28 to proceed with the flight tests. FAA sent an email to legislators on both Senate and House Committees that were tasked with overseeing Boeing’s efforts to resume the troubled jet.

This jet has been grounded by transportation authorities globally in the last 15 months after it was involved in two fatal crashes in 2018 and 2019. The FAA noted:

“Testing is expected to take several days and will include a wide array of flight maneuvers and emergency procedures to enable the agency to assess whether the changes meet FAA certification standards. Getting to this step does not mean the FAA has completed its compliance evaluation or other work associated with return to service.”

Market Movements

Boeing shares were marked 7.8% higher in early trading June 29 trading at $183.08. That move still left this stock with a year-to-date decline of around 44%. Boeing spokesman Bernard Choi told reporters that the company is working diligently to return the 737 MAX to commercial service safely.

However, Choi did not confirm or deny any planned tests at that time. He said that the company would defer to the FAA and global regulators on the resumption process. Late in May, Boeing stated that it had already resumed the production of the 737 MAX aircraft. But, the company also said that it planned to cut over 12,000 jobs while awaiting approval from the FAA.

Regulators around the world ground the plane after crashes in Ethiopia and Indonesia that killed 346 people. Boeing’s net orders for the grounded 737 MAX reached -9 including 14 cancellations taking the year-to-date total to 295.

System Upgrades

Software upgrades and fixes aimed at solving the Maneuvering Characteristics Augmentation System, or MCAS, and re-work were finished in May 2020. The completion was confirmed after 360 hours of testing over at least 200 flights according to an earlier Boeing report.

In April, Boeing stated that the first report into the cause of Ethiopian Airlines Flight 302’s fatal crash and the Lion Air 610 disaster in Indonesia was completed. The report stated that these fatal crashes were caused by the activation of the MCAS system while responding to an “erroneous angle of attack information” from a faulty sensor.

Boeing committed itself to correct the cause of these severely tragic incidents. Also, it acknowledged the losses to the families and friends of the loved ones who lost their lives. The FAA stated that it would evaluate various components of the 737 MAX automated flight control system. It explained that it will focus on the design and pilots’ interaction with the system.

Using that evaluation, the regulators will determine the system’s compliance with all applicable regulations. They will also identify any future enhancements that may be necessary.

Boeing (BA) Stock

Boeing (BA) stock has already put shareholders on a roller coaster in the last several months. In early March, the stock imploded massively dropping from around $300 to reach a low of $89 on March 18. However, it had rebounded to more than $180 about a week later.

The shares then went into a trading range of approximately $120 to $150 for two months before surging in June. The stock finished the month of May at $145.85. However, it exploded to $230.50 by the end of trading by June 8. That was a 58% gain in six trading days. However, it pulled back violently in the next three days losing 26%.

Some investors saw the pullback as a buying opportunity as evidenced by more buyers entering the market. Boeing’s business might remain weak for many months ahead compared to how it was performing before the crashes.

On June 26, BA stock lost 9.1% to settle at $170.01 taking the plane manufacturer to 47.5% down YTD. However, with the FAA’s announcement over the weekend, the Boeing stock rose to $194.49. That represents an increase of $24.48 or 14.40%. On June 30, the pre-market price was set at $188.11(-3.28%).

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Wanguba Muriuki

Wanguba Muriuki is a content crafter passionate about putting everything into writing. He is passionate about Blockchain and Traveling. He is also an experienced creative and technical writer. Everything and everyone has a story to tell. What better way to capture the real story than in words.

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