Photofex/iStock Editorial via Getty Images
Boeing (NYSE:BA) CEO said he’s optimistic that an upcoming trip to China by U.S. diplomats will result “robust” orders for planes in an interview on Bloomberg TV.
U.S. Secretary of State Antony Blinken is scheduled to visit China on February 5-6 in what has been described as an effort to rebuild relations amid disputes over Taiwan and the Covid-19 pandemic.
Treasury Secretary Janet Yellen also plans to visit China as the Biden administration considers restrictions on U.S. investment in parts of China’s technology industry and the possibility of lowering tariffs on Chinese goods.
Boeing (BA) built 138 of its best-selling 737 Max jets for Chinese airlines but they’ve been warehoused amid disagreements between China and the United States. After the United States and Ireland, China had been the third-biggest market for the 737 Max with deliveries of 93 planes from 2017 to 2022.
China’s carriers will “need the Max” satisfy growing demand for air travel, Calhoun said last week during a conference call with analysts to discuss Boeing’s (BA) quarterly results.
"They need airplanes. First and foremost, we've got to get the airplanes they already own back in the air," Calhoun said to Bloomberg TV. “The second step is return to delivery…the airplanes that are on our tarmac waiting to be delivered to China."
Boeing (BA) had planned to remarket some of those warehoused planes, but Calhoun said in the earnings call that the effort was paused “until we understand completely where China wants to go.”
The company this week announced that it will open a fourth assembly line for the 737 Max in the second half of 2024. Boeing (BA) has a goal of ramping up production of the single-aisle plane to 50 a month from about 30 currently.
Boeing's (BA) stock surged 76% in the four months between the end of September and the end of January as the company's yearly cash flow turned positive and deliveries of commercial planes increased. The Standard & Poor's 500 stock index (SP500) rose 14% during the same period.
Seeking Alpha columnist Dhierin Bechai has a Buy rating on Boeing (BA) on its growing output. Contributor The Value Investor rates Boeing (BA) as a Hold on concerns about its earnings multiple.
