Last year, the U.S. Federal Aviation Administration put a 38-per-month production cap on 737 Max jets after a door plug blew out of a Max aircraft last year.
Boeing’s stock gained over 1% in premarket trading on Monday after the planemaker received a nod from U.S. regulators to raise the output of its bestselling 737 Max jets to 42 per month.
Last year, the U.S. Federal Aviation Administration put a 38-per-month production cap on 737 Max jets after a door plug blew out of a Max aircraft last year, raising concerns over production quality at Boeing. On Friday, the FAA said that its safety inspectors “conducted extensive reviews of Boeing’s production lines to ensure that this small production rate increase will be done safely.”
Why The Production Cap Is Important?
The production output is a key step for Boeing to increase its cash flow as it receive the bulk of the payments from customers after delivering the aircraft. Earlier this month, a report said that Boeing has informed suppliers that it plans to increase the production rate of its best-selling 737 MAX jets to 42 per month as early as this month.
Boeing reportedly intends to maintain a 42 jets-per-month pace for about six months, ensuring its mechanics and suppliers aren’t overly stressed by building an additional 737 a week, before approaching the FAA about the subsequent increase in production, to close the gap with rival Airbus.
What Is Retail Thinking?
Retail sentiment on Stocktwits about Boeing was still in the ‘bearish’ territory at the time of writing.
One investor said that the uptrend in the shares should start now following the FAA announcement.
However, some were still wary about an accident involving a Boeing cargo plane at Hong Kong.
What Happened To A Boeing Plane In Hong Kong?
According to a Reuters News report, a Boeing cargo aircraft slid off the runway, collided with a security patrol vehicle, and pushed it into the sea, killing two security personnel in Hong Kong.
The Boeing 747, operated by Turkish freight carrier ACT Airlines for Emirates, was flying in from Dubai. Visuals showed the aircraft broken in half and partially submerged in the sea. Investigators reportedly said they were still looking for the cause of the incident.
Boeing stock has gained 19.4% this year.
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