Boeing's 737 MAX 7 Was Supposed to Be Flying in 2019. The FAA Certified It Monday.
The approval arrived seven years late. The cash it unlocks could start arriving much sooner.
Overview
When Boeing (NYSE: BA) flew the 737 MAX 7 for the first time in March 2018, the company said the jet was on schedule for certification and delivery in 2019. On Monday, seven years past that target and several crises later, the Federal Aviation Administration finally issued the amended type certificate that clears the plane for commercial service.
Boeing shares rose 8% Monday to close at $233.49, within about 9% of their 52-week high of $254.35 and giving the plane maker a valuation of about $185 billion. The certificate wasn't the main driver, though. Boeing rallied on three things Monday: cheaper oil, a BNP Paribas double upgrade from underperform to outperform, and then the certification.
Details
The approval matters for a simple, mechanical reason. Plane makers collect most of an airplane's price when they hand it over to the customer, and Boeing has spent years building jets it wasn't allowed to deliver. Certification is what turns that finished inventory into revenue. Monday loosened the bottleneck -- and I'd argue that matters more than Monday's tape suggests.
Source
Originally published at www.fool.com.