Boeing shares moved higher Tuesday after Southwest Airlines said it would convert nearly three dozen options for the planemaker’s 737 MAX aircraft into firm orders as travel demand continues to improve in the waning weeks of the coronavirus pandemic.
Southwest said it has converted options on 34 737 MAX jets to confirmed orders, with the expectation of taking delivery in 2022, as it boosted near-term operating revenue forecasts amid improvements in summer travel bookings as the country exits pandemic restrictions.
Boeing shares were marked 1% higher in early trading Tuesday following news of the Southwest order confirmation to change hands at $255.10 each. Southwest shares, meanwhile, edged 0.6% to $58.61 each.
Reports last month suggested Boeing could take its Max production output to 42 jets per month by the fall of next year, well ahead of the planemaker’s current target of a “gradual” increase to 31 planes per month by the spring of next year, as airline demand for passenger planes continues to accelerate.
Last week, Airbus, which overtook Boeing’s lock on the global planemaking business last year, said it will produce 45 of its single-aisle A320neo aircraft by the end of the year, a 10% increase from current levels, with output rising to 64 each month by the middle of 2023.
Boeing had cautioned earlier this year that it doesn’t expect global airline passenger traffic to return to 2019 levels for at least another two years, adding that airline customers continue to adjust their operations and fleet planning based on those projections.
That view was echoed by the head of the International Air Transport Association lobby group, Willie Walsh, who told reporters in Dublin earlier this week that staff cuts and a dearth in new aircraft supply means the “ability for the industry to recover to the 2019 levels of capacity quickly is now impossible”, adding the return may in fact take several years.
This article was originally published by TheStreet.