Boeing has received a significant boost as Juneyao Airlines takes delivery of a 787-9 Dreamliner, marking the company’s first direct delivery of a passenger aircraft to China since November 2019.
For some time, China had not been accepting deliveries of new Boeing jets due to lower demand caused by zero-Covid policies and the subsequent decline in air travel. However, as the region’s air travel slowly returns to normal, with October seeing a 90% increase compared to the previous year, Boeing is starting to see positive signs.
Investors have eagerly awaited the resumption of deliveries. Deutsche Bank analyst Scott Deuschle recently noted the sighting of a 737 MAX that seemed to be heading to China based on publicly available flight tracking data. While this delivery is anticipated in the near future, news of the 787 delivery took precedence.
This restart in deliveries is indeed good news for Boeing, signifying a more normalized state following the challenges posed by both COVID-19 and the global grounding of the 737 MAX. In 2018, Boeing delivered over 800 jets, but that number dropped significantly to 157 units in 2020. However, FactSet predicts that Boeing will deliver 520 planes in 2023, with expectations of around 800 jets in 2025.
Although investors were aware that Chinese deliveries would eventually resume, the timing remained uncertain. According to Boeing’s estimates, China will require approximately 8,560 new commercial airplanes by 2042 to meet the growing demand for air travel, accounting for approximately 20% of global demand during that period.
Boeing’s stock experienced a 0.6% increase in late trading on Thursday, while the S&P 500 and Dow Jones Industrial Average rose by 0.9% and 0.7%, respectively.
As air traffic continues to recover from pandemic-induced lows, Boeing’s stock has seen a year-to-date increase of about 34%. This upward trend reflects growing investor confidence in the company’s outlook.