Boeing Stock (NYSE:BA)
As of 11:20 AM, Boeing stock was down 2.3%. Yesterday, an analyst released a cautionary note about the aircraft maker, causing some investors to fret.
What’s the Reason?
According to a Wednesday report, the Allied Pilots Association of American Airlines is fighting to ensure that Boeing (NYSE:BA) does not have to install “new cockpit alerting” technologies in its Boeing 737 MAX 7 and MAX 10 aircraft before they can gain FAA certification (FAA). In December, if the FAA has not certified the MAX 7 and MAX 10 for flying, the additional cockpit alert standards will go into effect for Boeing, as reported by Reuters. Once these regulations are implemented, Boeing stock will have to make costly adjustments to the design of both aircraft to make them compliant.
Boeing (NYSE:BA) argues it shouldn’t be forced to comply since it’s safer to have a single pilot alert system working across all 737 models. However, the business does not anticipate receiving its exemption and, therefore, MAX 7 and MAX 10 clearance until the following summer.
What Should You Do Now?
The question is why this represents a setback for Boeing stock. About 22 percent of Boeing’s order book comprises MAX 7s and MAX 10s, according to Bank of America data cited by StreetInsider. (Another 60% of 737s are different models.) Because of this, any holdup in the MAX 7 and MAX 10’s certification might significantly impact Boeing’s (NYSE:BA) bottom line.
The longer the MAX 7 and MAX 10 controversy continues, the more time Boeing’s competitor Airbus (EADSY) has to increase its sales and delivery leads over Boeing in the single-aisle aircraft market. However, BofA believes that Boeing (NYSE:BA) is still “dominant” in widebody aircraft sales. However, widebody Boeing 767, 777, and 787 jets make for less than 20% of the company’s order book despite being more expensive than single-aisle planes and hence a proportionally higher share of the income stream. Boeing stock is fighting Airbus with one wing tied behind its back as long as the 737 lines are beset with issues.
Boeing’s expenditures to update its pilot alert systems are just the latest blow to the company’s already dismal week of news. Boeing stock doesn’t seem like a good investment, with a forward P/E ratio of over 25 and dimming prospects.
Featured Image- Megapixl @ Rafaelhenriquepress
Author Shariq Khan 
