Boeing shares rejoice as FAA clears 787 Dreamliner for deliveries

By:
on Aug 1, 2022
  • Boeing has about $25 billion worth of 787 Dreamliners in inventory.
  • Deliveries are slated to begin as soon as next month (September).
  • Boeing shares are up nearly 8.0% on the news this morning.

Shares of Boeing Co (NYSE: BA) are up nearly 8.0% on Monday after the Federal Aviation Administration (FAA) cleared its 787 Dreamliner for deliveries.

787 clearance comes at the perfect time

The stock market news could not be better timed for Boeing since its wide-body commercial aircraft mostly caters to the long-haul traffic that’s seen picking up moving forward now that the COVID restrictions have been removed.

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The multinational currently has about 120 Dreamliners worth about $25 billion in inventory. Naturally, therefore, Boeing is slated to see a boost in cash flow as deliveries begin in September. The regulator will still inspect each unit before it’s delivered.  

It also has plans of lifting 787 production to match the backlog. The impact on the cash flow, however, will take until 2023 to properly realize. Boeing shares are still down more than 15% for the year.

Boeing reported its fiscal Q2 results last week

Following a fourteen-month halt, Boeing said, it will deliver the first 787 to American Airlines next month. The largest U.S. air carrier expects to get another eight by the end of 2022.

The Dreamliner is a fuel-efficient wide-body aircraft that makes it more appealing for the worldwide airlines for international flights.  

The clearance comes only a week after Boeing reported weaker-than-expected results for its fiscal second quarter. Its free cash flow, however, came in at negative $182 million versus a sharply higher negative $1.01 billion expected.

Wall Street currently has a consensus “overweight” rating on Boeing with upside to $204 on average that represents another 13% increase from here.  

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