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Boeing said it received a new order for two dozen 737 MAX jets.
Silvio Avila / AFP via Getty Images
Boeing
has secured a new customer for its 737 MAX jets, and the new order is boosting the shares of the commercial aerospace giant. Friday’s gain limits what was an incredible week for Boeing shares.
Boeing shares (ticker: BA) were up 6.8% on Friday. The shares are on a five-day winning streak, up more than 20% last week. The S&P 500, for comparison, rose about 2.6%. The Dow Jones Industrial Average increased 4% in the same period, thanks in large part to Boeing.
The Dow is a price-weighted index, and Boeing has the fourth highest share price, around $ 270, making Boeing a relatively large component of the Dow. This week’s stock gains added about 300 points to Dow’s overall gain of almost 1,300 points this week.
The private equity firm 777 Partners is the buyer of two dozen MAX jets and has options for another 60. It is fair to say that the 777 came out of nowhere: it is the company’s first order for a Boeing, and the 777 Partners is not a traditional airline or aircraft rental company.
Boeing referred Barron’s to your press release when asked about 777.
“We couldn’t be more excited about partnering with Boeing on this transformative order for our growing aviation business,” said 777 managing partner Joshua Wander in the Boeing press release. “The downsizing of traditional operators worldwide has created an unprecedented market opportunity for more agile and economical operators.”
777 Partners has several investments in low cost airlines worldwide, and the MAX jets will be operated by these airlines. 777 Partners was not immediately available for a comment on its purchase or aircraft deployment strategy.
MAX has had two difficult years. It was landed worldwide in March 2019, after two fatal accidents over a five-month period. The plane only returned to carry passengers last December.
The 737 program registered more than 500 jet cancellations in 2020. The pandemic, of course, has decimated the demand for commercial air travel. Boeing, however, has managed to generate some additional orders, or letters of intent to purchase, for the MAX jet in recent years.
Airlines and aircraft rental companies are still interested in MAX because it is cheaper to operate than older models, and airlines always need to cut costs. Boeing has about 4,000 MAX jets in its portfolio.
Write to Al Root at [email protected]