The Federal Aviation Administration (FAA) has outlined fixes to the Boeing 777-200 airplanes manufactured by The Boeing Co. (BA) after thorough inspections, Reuters said. The changes will enable Boeing to resume the airplanes to service since their stoppage earlier this year.
Shares of the company jumped as much as 1.7% on the news and closed the day up 1% at $201.69 on December 22.
FAA Guidelines
In February this year, a United Airlines Holdings (UAL) aircraft which took off from Denver, had to make an emergency landing as the engine's fan blades broke the engine cover mid-air. The aircraft was a Boeing 777 jet equipped with Pratt & Whitney (PW) engine.
After the incident, the FAA had called for an immediate inspection of the 777 jets and halted their use. After inspection, the FAA has issued guidelines for strengthening the engine covers to avoid any breakage of plane parts while flying, and to avoid future mishaps.
Additionally, the FAA has said that it needs to undertake enhanced inspection of the fan blades as well as other systems and components.
United Airlines is the only U.S. carrier of these jets and has about 52 jets of the same make. The airline has said that it will resume service of these jets early next year.
Company Comments
Boeing said that it will co-operate with the FAA in the inspection of the Pratt & Whitney PW4000 engines "and will work with our customers and Pratt & Whitney through the process."
Raytheon Technologies Corp. (RTX), the parent company of Pratt & Whitney, stated that the fan blades were already being inspected and said the inspection could “be performed in the field, on or near-wing by trained personnel.”
Meanwhile, United Airlines said that they were happy with the guidelines and that they were “a good outcome for our industry and United customers.”
The FAA said, “further action is necessary to address the airplane-level implications and unsafe condition resulting from in-flight engine fan blade failures.”
Consensus View
Earlier this month, China gave the go-ahead to Boeing 737 Max jets to resume services in the country. Susquehanna analyst Charles Minervino is encouraged by the news and believes it will boost Boeing’s growth prospects in 2022.
Minervino reiterated his Buy rating on the BA stock with a price target of $243, which implies 20.5% upside potential to current levels.
Overall, the BA stock commands a Strong Buy consensus rating based on 13 Buys and 3 Holds. the average Boeing price target of $268.71 implies 33.2% upside potential to current levels. Shares have lost 8.2% over the past year.
Stock Investors
TipRanks’ Stock Investors tool shows that retail investors currently have a Very Positive stance on Boeing, with 1.7% of portfolios tracked by TipRanks increasing their exposure to BA stock over the past 30 days.
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