Boeing shares take off on report that China may lift 737 freeze, bumper Dubai orders

Boeing’s shares soared on Monday following reports that China was mulling over ending its freeze on buying the company’s popular 737 MAX aircraft, a freeze that has lasted for over four years.

In addition to this news, a surge in jet orders from Middle Eastern airlines at the Dubai Airshow caused Boeing shares to jump by 4%, while supplier Spirit Aerosystems saw a 2.7% increase.

According to Bloomberg News, China is contemplating a return to purchasing Boeing’s 737 MAX planes, a move that could have a significant impact on Boeing’s profits in the coming months. This consideration comes ahead of a meeting between the U.S. and Chinese presidents at the APEC summit.

Thomas Hayes, chairman of hedge fund Great Hill Capital, remarked that the potential resurgence of 737 orders from China would greatly benefit Boeing’s financials within the next 6-18 months, especially as deliveries of the 737 MAX to Chinese airlines were halted after two fatal crashes.

Furthermore, Boeing sealed deals for 125 widebody jets valued at over $50 billion from Emirates and its sister airline flydubai during the opening of the Dubai Airshow. This surge in demand for larger aircraft follows a prolonged period of reduced long-haul travel due to the COVID-19 pandemic.

As airplane manufacturers’ backlogs have grown and deliveries have been delayed, there has been a sense of urgency among carriers to place orders, contributing to the positive outlook for Boeing.

“The potential reopening of the 737 in China for Boeing and the contracts at the Dubai Airshow is all kind of the perfect combination of optimism and positive outlook that the stock has been needing for many months where it has underperformed,” Hayes added. Boeing’s shares were trading at $205.15, compared with analysts’ current median price target of $250, according to LSEG data.

(Reporting by Shivansh Tiwary and Ananya Mariam Rajesh in Bengaluru; Editing by Shilpi Majumdar)