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Fly Again

18 November 2020 by jbchevrel

The Boeing Company (BA) is an aerospace firm which operates in 5 segments: Commercial Airplanes, Defense, Space & Security, Global Services and Boeing Capital. The 1st segment develops, produces and markets commercial jet aircraft and provides fleet support services, principally to the commercial airline industry worldwide. The name has been challenged by 737 Max groundings (2 crashes within 5 months, 346 dead) and COVID consequences on air traffic (passenger volumes reached -95% YoY in the world in April 2020). The COVID-induced restrictions on international flights sapped demand for wide-body planes (bigger than the Max). Bottom line, BA manufactured 750 planes last year (in total) and they are expected to have manufactured just 240 as we reach the end of this year. BA has got an inventory of approximately 450 planes parked at Washington state airfields. Today the FAA in the US, issued an order to allow Boeing 737 Max to fly again. These had been grounded since March 2019 and production was stopped in January 2020. Although this positive development had been expected, this was welcomed by the CDS. The 5y contract on BA tightened today by -18bp, closing at 209bp on our London European close. Wide close was 618bp on March 23rd and we are now at the COVID-to-date tights, with protection costing about three times less than at the peak in spring. The FAA required that BA changes flight control software (so-called MCAS) and that pilots train to drive the Max in flight simulators. Families of the crashes victims say aviation regulators have done too little to assure the plane’s safety and urged potential passengers to steer clear. A lawsuit against Boeing pursued by many of the families from the second crash is ongoing.