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Boeing Stock Higher as China 737 MAX Test Flight Raises Certification Hopes

China remains the last major aviation regulator left to clear the 737 MAX for return to service following the second of two deadly crashes in March 2019.

Boeing  (BA) - Get Boeing Company Report shares moved higher Wednesday after a promising test flight of the planemaker's 737 MAX that could lead to the grounded jet's return to service in China. 

FlightRadar24 reports showed Wednesday that a 737 MAX jet took off from Shanghai's Pudong International Airport and landed in Zhoushan, the site of a Boeing factory designed to install plane interiors. The plane had left Seattle for the test flights last week, according to multiple media reports. 

China's Civil Aviation Administration, which grounded the MAX following the second of its fatal crashes in  March of 2019, has yet to recertify the workhorse jet amid ongoing trade tensions with the United States and questions over Boeing's relationship with the Federal Aviation Administration

China, however, remains a key market for Boeing, with the planemaker forecasting in September of 2019 that the world's biggest aircraft market would need 8,100 new planes in order to expand its fleet between now and 2038, an estimate that would bring around $1.3 trillion in sales at current list prices for both the company and its main European rival Airbus SA  (EADSY) - Get Airbus SE Report

A further $1.6 trillion in commercial services for China's fleet will also be required, Boeing said at the time.

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"Going forward, the pace of the commercial market recovery, trade relations with China, production rates, and our own performance, our execution will be key factors of our overall employment levels," CEO Dave Calhoun told investors in late July after the planemaker's second quarter earnings. 

"Regulatory approvals will shape our delivery plans and our production ramp -- our rate ramp. We continue to work with global regulators and still anticipate that the remaining regulatory approvals will occur this year, including China," he added. "And as always, we will follow global regulators' lead in the steps ahead.

Boeing shares were marked 1.3% higher in early trading Wednesday to change hands at $238.85 each. Gains were capped, however, but lower airline stocks after Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report said current quarter revenues would be down between 15% to 20% compared to 2019 levels -- a sharp reduction in a forecast delivered just three weeks ago -- thanks to a surge in Delta variant infections that continues to hit the leisure travel industry.

Southwest was marked 1.2% lower at $50.50 each while American Airlines  (AAL) - Get American Airlines Group, Inc. Report fell 0.75% and United Airlines  (UAL) - Get United Airlines Holdings, Inc. Report slipped 1%.

Last month, Boeing posted its first quarterly profit in more than two years thanks in part to the post-pandemic rebound in commercial aviation and an accelerating coronavirus vaccine rate.

Boeing also noted that its current order backlog edged lower on the quarter, to $363 billion, adding that the commercial airlines portion of the tally rose to $285 billion thanks to 180 net new orders.