(ticker: RYAAY) said Thursday that it will buy 75 MAX jets in addition to the 135 firm orders the European airline already has on Boeing’s books. What is more, Ryanair said it would take delivery of planes at a faster rate than it had planned.
Boeing shares were up 5.6% in early trading Thursday. Investors are no doubt glad to see a new MAX order—the first substantial one since June 2019—after the plane’s prolonged grounding. The MAX was barred from carrying passengers in the U.S., and many other countries between March 2019 and November 2020 after two of the jets crashed within five months.
Customers canceled orders for hundreds of jets in a shift that was made worse as the pandemic devastated the travel industry. Boeing stock has fallen about 45% since the second MAX crash.
The good news about the order isn’t all that has shares on the move. Both Ryanair and Boeing sounded more upbeat about the outlook for commercial aerospace given the advent of effective vaccines against the novel coronavirus.
Boeing CEO Dave Calhoun expressed confidence that global air travel would recover from the pandemic faster than the three to five years initially predicted. He also predicted that trends for Boeing’s order book would turn around, with “more [orders] coming in than going out.”
Executives from both companies addressed the MAX’s safety, customer acceptance, the potential rebranding of the plane, and pricing incentives for the order at a Zoom-assisted media event. “The discount is modest,” said Ryanair CEO Michael O’Leary.
He also said the plane was now the most scrutinized plane in history, and that the crashes and grounding won’t have a long-term effect on the profitability of flying the plane. Ryanair is a longtime Boeing customer and flies an all-Boeing fleet.
Calhoun added there are no planes to rename the aircraft.
Other aerospace suppliers’ stocks are reacting to the news as well.
(GE) shares are up 1.3%.
(SPR) shares rose 4.9%, and
(RTX) shares have gained 1.6%.
is up 0.2%, while the
Dow Jones Industrial Average
has risen 0.5%. A big reason, of course, the Dow is outperforming is Boeing. It is a larger component of the Dow than it is of the S&P 500.
Looking ahead, investors need to assess the speed of the global aerospace recovery. Commercial air travel in the U.S. over the Thanksgiving holiday fell more than 60% year over year. Fewer planes are flying, and each one is carrying fewer people. That make vaccines and a return to normal a bigger issue for Boeing than even the MAX.
Boeing stock has gained about 32% since Nov. 9, when
(PFE) disclosed data showing its vaccine is highly effective.