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After being peppered with bad press concerning the incessant 787 Dreamliner delays, it appears that Boeing (NYSE:BA) is finally getting its act together. On Wednesday, an industry watcher said sources at the commercial airline maker claimed that that the firm’s first 787 test aircraft could see its first flight as soon as December 14th. However, further tests could derail the flight and it’s dependent on cooperation from the weather.

Still, a positive step forward is likely to be a morale booster both for the company itself as well as shareholders.

Any good news from Boeing will buoy the PowerShares Aerospace and Defense Portfolio (NYSEARCA:PPA) and the iShares Dow Jones U.S. Aerospace and Defense Index Fund (NYSEARCA:ITA). These two instruments each hold Boeing as their second largest holding, representing 6.64% of PPA and 7.41% of ITA. In the most recent 1 month period through December 1, PPA and ITA are up 7.9% and 8% respectively.

While the news concerning the Dreamliner will boost BA’s commercial side, the firm’s defense branch may also soon see a jump. Recently, Northrop (NYSE:NOC) threatened to withdraw from its three year bidding competition with Boeing to decide who would build the Air Force’s new aerial refueling tanker. Although the firm has not officially abandoned the competition, if they do, Boeing will remain the sole bidder and see a comfortable boost.

With prospects for one of the funds’ largest holdings looking brighter, ITA and PPA may prove beneficial as a small overweight sector position in a well diversified portfolio. Both funds show strong short-term momentum, even though they remain in the middle of the pack relative to other sector ETFs. With additional forces headed to Afghanistan, more equipment will eventually need to be replaced and that will be another positive for these ETFs.

Disclosure: no positions

Source: Good News from Boeing Lifts Aerospace ETFs