Shares of
Boeing
and other aerospace-related companies are flying higher, riding an updraft of positive factors ranging from increased air traffic to more repair business.
Thursday, Boeing (ticker: BA) stock closed up almost $6, or 2.8%, at $218.11, falling short of its 52-week closing high by 34 cents.
The stock is down more than 50% from its record closing high of $440.62 on March 1, 2019, before the pandemic and before the second of two deadly crashes that led to the worldwide grounding of the 737 MAX jet. Still, shares are up more than 60% over the past 12 months.
The 52-week closing high is $218.45, seen on Feb. 14.
The continuing recovery in air travel is helping. The International Air Transport Association, or IATA, released global air-traffic data for April on June 1. Industrywide traffic was up 46% from a year earlier and at 91% of pre-Covid levels.
Domestic air travel was 3% above pre-Covid levels. “This recovery was driven by growth in various markets, particularly in the Asia Pacific region,” reads the IATA news release. Travel within China rose more than 500% from a year earlier following the end of lockdowns meant to fight Covid-19.
The air-travel recovery means more need for planes and more demand for aerospace-related services. That helps other aerospace shares too.
General Electric
(GE) stock rose was up most of the day, just off its 52-week high hit Wednesday, but closed flat. GE makes many of the engines on Boeing planes. Stock in
FTAI Aviation
(FTAI), which repairs and maintains many engines on Boeing planes, closed up 5.4%.
Deutsche Bank analyst Hillary Cacanando visited an FTAI facility in Montreal on Wednesday and wrote positively about the stock on Thursday. The tour “was very timely given the significant tailwinds for the company,” wrote the analyst.
In addition to the travel recovery, those factors include supply-chain constraints that slow down deliveries of new jets, creating an opportunity for repair businesses. The learning curve associated with new engines such as GE’s LEAP and GE9x technology offers another boost.
LEAP engines can be found on the 737 and
Airbus
(AIR. France) A320 families of jets. The GE9x is the new engine for Boeing’s 777x.
New engines can take time to build reliability, which means yet more business for repair organizations. That isn’t a new thing in the industry, but there is a lot of new engine technology entering the market these days. Cacanando rates FTAI shares Buy and has a $32 price target for the shares.
Barclays
also raised its GE price target to $125 from $115 a share Thursday, ahead of the Paris Air Show. The show, which begins in about a week, is a place where a lot of airlines do business with
Airbus
and Boeing.
Any one data point is small, but together they seem to be moving the sector higher. For part of Thursday trading, Boeing shares were the best performer in the
Dow Jones Industrial Average
and the third-biggest gainer in the
S&P 500.
Write to Al Root at [email protected]
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