Boeing (BA) - Get Report CEO Dennis Muilenburg bounded out of the Trump Tower elevator Tuesday and strode towards the press gaggle, the second time he's had to undergo the ritual required of all visitors to the President-Elect.
"I think Mr. Trump is doing a great job of engaging with business," Muilenburg told reporters in the lobby after another discussion about lowering the costs of Air Force One. He previously visited Trump at his Mar-a-Lago estate in Palm Bleach, Fla. in December. "We're on the same page here."
Trump's tweets chiding Boeing for perceived cost overruns in building the presidential plane - the price tag for two of the aircraft is expected to approach $3.73 billion over the next 12 years, per Air Force budgetary documents - have drawn media attention but haven't affected investor confidence in the aviation giant. Shares of the company rose a modest 0.23% to $158.04 Wednesday. In fact, the company has gained 11.1% since Trump's victory in November.
"There's some headline risk there, for sure," Morningstar analyst Chris Higgins said of Trump's targeted tweets in a phone interview."Is there real business risk?... Maybe on the defense side, a little bit."
The bigger risk to Boeing's bottom line may be Trump's policy agenda towards foreign trade. Trump has spoken with a protectionist tone for well over a year, but the exact measures he'll take to protect U.S. manufacturing interests currently sit in a black box.
One idea on the table is House Republicans' proposal for a border adjustment tax. The new levy would tax imported goods headed into the U.S. at a rate equal to the corporate income tax and allow U.S. companies to exempt their exports.
Boeing's commercial aircraft all undergo final assembly in the United States, albeit using parts sourced from Japan, China and Europe.
"That could potentially impact their business if those products are subject to tax," Higgins said. "Most of the costs of building an aircraft are external to Boeing."
Proponents of the border adjustment plan have argued that it will make the U.S. dollar even stronger. That's good news for retailers afraid of paying more for imported goods, but bad news for Boeing.
Boeing and Blagnac, France-based Airbus have a duopoly in the commercial aviation space. A strong dollar - and weak euro - makes Airbus more cost-competitive against Boeing. Since commercial aircraft are sold in dollars, Airbus has a cost base denominated in euros and a revenue base denominated in dollars. This means that Airbus can build its planes cheaper than Boeing while simultaneously reaping the benefits of the euro-dollar exchange rate.
"You're not only competing against the features and the functionality [of Airbus planes], you've got some profitability issues which change the dynamic," Edward Jones analyst Jeff Windau said in a phone interview. "That's definitely an issue. There's not a whole lot Boeing can do about that."
Trump, for his part, called the dollar "too strong" in a Friday interview with the Wall Street Journal and has been noncommittal on the border adjustment idea.
The President-Elect, broadly speaking, has been partial to tariffs. He once spoke on the campaign trail of imposing a 45% tariff on all Chinese goods entering the U.S.
The political repercussions of that tariff would bring its own share of headaches for Boeing, as China is the biggest growth center in commercial aviation. In September, the company forecasted demand for 6,810 airplanes in the country over the course of the next 20 years. Boeing estimated the total value of those planes to be $1.025 trillion.
Boeing has a total commercial backlog of 5,715 planes, per Windau, and reported 51 new orders from Chinese airlines for 2016.
"If Trump engages in a trade war with China, that could really hurt Boeing," Higgins said. "That's about 20% of their backlog."