The FAA cleared Boeing's smallest 737 Max jet for commercial service on Monday, sending Boeing shares up more than 6% to lead the Dow. The approval, nearly a decade in the making, also improves the outlook for certifying the larger 737 Max 10.
Boeing shares rallied more than 6% on Monday after the Federal Aviation Administration cleared the company's 737 Max 7 for commercial service. The stock led gainers in the Dow Jones Industrial Average.
FAA clears the smallest Max after a decade-long review
The 737 Max 7 clearance closed a review that had been running for nearly a decade. Wall Street took the move as one more sign that Boeing's turnaround continues. The approval also bodes well for the eventual certification of the larger 737 Max 10, which completed its final tests last month.
Boeing said in a statement that the decision validates the rigor of the airplane's design and reflects the resilience of its 737 Max development team. Boeing's stock is on track for its highest close in nearly a month and its largest one-day percentage gain since Dec. 2, when it rose 10%. Besides leading the Dow, Boeing was also among the top 10 best performers in the S&P 500.
Southwest and airline stocks move higher too
The 737 Max 7 is the smallest and longest-range member of the Max family, offering 135 to 160 seats and about 10% more range potential than its siblings. That flexibility suits airlines running both domestic and short-haul international routes. There are 282 Max 7 orders as of the end of June, or 6% of the 4,846-aircraft Max backlog, according to analysts at Jefferies.
Southwest Airlines is in line to be the Max 7 launch customer, and its shares rose 3% on Monday. The U.S. Global Jets ETF also advanced 3.6% alongside gains for other airline stocks.
Analysts point to a tailwind from certification
Earlier Monday, analysts at BNP Paribas upgraded Boeing shares to the equivalent of buy, citing the certification of both the Max 7 and Max 10 as a tailwind for the company. They said the certifications "will drive inventory liquidation and operational stability."
Source: MarketWatch
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