Boeing Shares Fly Higher as Airlines Resume Flights

Boeing, the world’s second-biggest maker of jets, benefits from an unexpected increase in flights by U.S. carriers.
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Boeing  (BA) - Get Report shares surged Friday as the world’s second-biggest maker of jets benefited from an unexpected increase in flights by U.S. carriers.

American  (AAL) - Get Report announced Thursday that its domestic flights in July will register 55% of last year’s July total. In April and May the figure was 20%. It’s now transporting about 110,000 passengers a day, up from the 32,000 average in April.

Delta’s  (DAL) - Get Report daily passenger count now totals 65,000, more than double the April amount.

In addition,  (AMZN) - Get Report announced this week it’s going to lease 12 more Boeing 767-300 freighter aircraft from Air Transport Services Group  (ATSG) - Get Report.

Morningstar analyst Burkett Huey has mixed views about Boeing. Its $25 billion bond issue in April answers investors’ liquidity concerns, he said.

“We’re positive about this transaction as a whole because it takes a large amount of tail risk off the table,” he wrote in a commentary last month. “By our estimates, the additional debt would allow the firm to survive for about a year of cash flow as bad as this March’s cash flow.”

But don’t get too excited, Huey said. “The firm materially increased its leverage from the transaction, and we’re anticipating that the firm will carry materially more debt than 2018 for at least the next four years,” he said.

“Balance sheet reduction is the right thing to do. … “But we worry that the firm may not reinvest enough in the business to continue driving product innovation.”

Boeing shares recently traded at $212.52, up 15.31%. But the stock is down 25% for the last three months, even after soaring 46% over the last week.