Text size
The nose of a Boeing 737-A aircraft.
Olivier Douliery / AFP via Getty Images
The Federal Aviation Administration will study how Boeing handles security-related communications with it, but the actions do not react, for good reason.
The review, reported Monday afternoon by The Wall Street Journal, comes after a small survey, conducted by the FAA, which found that about a third of the company’s respondents reported difficulties in being transparent with the regulator.
Shares of Boeing (ticker: BA) rose about 1.3% during the morning trading. He
S&P 500
had increased by about 0.3%. He
Dow Jones industrial average
gained 0.2%.
Safety is paramount in the aerospace industry, but the lack of reaction of stocks makes sense. Boeing has been dealing with safety issues for about two years after the global launch of the 737 MAX jet in March 2019.
The MAX returns to most countries in the world. But the accidents that led to its grounding and the recertification process led to greater control by Congress, new laws regarding aircraft certification, and a change of direction at Boeing. Former CEO Dennis Muilenburg was succeeded by current CEO Dave Calhoun. And while all this was going on, Boeing set up a board-level committee dedicated to safety oversight.
All of this means that, to some extent, the FAA letter is looking investors back. A lot of security news is already reflected in the price of Boeing shares. Shares have fallen by about 50% from their all-time highs.
Airbus
(AIR. France), for comparison, has fallen by about 20% from its maximum.
The important thing about the letter is how Boeing’s new management reacts to it.
“We take these issues with the utmost seriousness and work continuously to improve the processes we have established to ensure the independence of [FAA-related] members, “Boeing said in an emailed statement. The company acknowledged receiving the letter, but declined to make it public. The FAA was not immediately available for comment.
Boeing added in its statement that the company has worked hard to build an open communication culture and told staff that employees responsible for communicating directly with the FAA should be given the same respect and the same deference that the company gives to the regulator itself.
De Barron he recently wrote positively about Boeing’s actions, believing that if Calhoun took the right steps — including changing the company’s culture to highlight engineering excellence — the actions could win. This article appeared in early August. Shares have fallen about 6% since then.
Airbus
the shares have a discount of approximately 3%. News of the Delta variant of the Covid-19, and concern about how it may affect travel and aircraft demand, seems to weigh on both stocks.
Write to Al Root at [email protected]