Boeing (NYSE:BA) shares closed Friday's session with a notable gain, rising 1.5% to settle at $242.96. The stock traded within a range of $238.62 to $246.45, with volume reaching approximately 6.8 million shares. This performance exceeded that of key sector benchmarks, as the iShares U.S. Aerospace & Defense ETF (ITA) advanced about 1% and the Industrial Select Sector SPDR Fund (XLI) gained close to 0.8% for the day.
The trading activity occurred ahead of the U.S. market closure on Monday, February 16, for the Presidents Day holiday. This break leaves market participants to digest recent developments in the aviation sector before activity resumes. Historically, Boeing's stock has shown sensitivity to news flow following such holiday interruptions, often reacting to headlines that might otherwise receive less attention during a standard trading week.
Production Strategy and Revised Timelines
A central focus for investors remains Boeing's execution on its production roadmap. The company is taking a measured approach to managing expectations on the factory floor. According to a senior company executive, Boeing plans to inaugurate a fourth 737 MAX production line at its Everett, Washington facility by midsummer. The current objective is to incrementally increase output from 38 aircraft per month to 42.
However, the path to higher production volumes will be protracted. Katie Ringgold, head of the 737 program, informed suppliers that the long-term target of 63 jets per month is "years in the making." The next scheduled production hike, to 47 planes monthly, is not anticipated until 2027, signaling a deliberate and cautious ramp-up strategy.
Supply Chain Improvements and Spirit Reacquisition
There are positive signals emerging from Boeing's supply chain. Ihssane Mounir, Senior Vice President for Global Supply Chain and Fabrication, reported that the company is now spending 40% less time addressing supplier-related fixes compared to 2024 levels. Notably, defects originating from key supplier Spirit AeroSystems have fallen by 60% since Boeing enhanced its oversight and inspection protocols.
Mounir highlighted the strategic benefit of Boeing's agreement to reacquire Spirit AeroSystems, stating, "Spirit coming back into family was probably the best thing that's happened in my career." This move is viewed as a critical step in streamlining production quality and coordination.
Regulatory Scrutiny and Fleet Challenges
Regulatory oversight continues unabated. The Federal Aviation Administration (FAA) issued a proposed airworthiness directive on Friday targeting certain older Boeing 737 models, specifically the -100 through -500 series. The action was prompted by the discovery of cracks in the fuselage skin beneath the aft drain mast. The directive, which is open for public comment until March 30, would apply to an estimated 123 U.S.-registered aircraft and could cost roughly $595 per mandated inspection if adopted.
Meanwhile, a separate fleet development poses a potential indirect challenge. United Airlines (UAL) disclosed a disagreement with engine manufacturer Rolls-Royce (RYCEY) concerning its role in a long-pending order for Airbus (EADSY) A350 jets. United has removed any firm delivery schedule for 45 of these aircraft, though its official books still list them for arrival after 2027. Rolls-Royce has expressed confidence in its position. This dispute could result in a settlement that maintains the status quo for Airbus or escalate into a protracted legal issue, potentially freezing fleet decisions. Neither outcome guarantees an automatic benefit for Boeing.
Defense Sector Opportunity
On a positive note, Boeing's defense segment may see a boost. Reports indicate that India has approved initial purchases under a new defense package, which includes Boeing P-8I maritime patrol aircraft. The deal also involves additional Rafale fighter jets and provisions for expanded local industry involvement, representing a significant international opportunity for the company's defense division.
As Wall Street prepares to reopen on Tuesday, February 17, investor attention will swiftly return to the aerospace sector. Key monitors will include any developments in United Airlines' widebody fleet strategy and further regulatory updates or filings from the FAA concerning Boeing. The company's ability to steadily increase production while maintaining quality control and navigating regulatory landscapes will likely remain the primary driver of investor sentiment in the near term.
