As Boeing (BA) works on a 737 Max fix, a vast majority of Americans would hesitate to fly the troubled jet but only a small share of travelers would never fly on it again, a new study shows. Boeing stock rallied.
Analysts at UBS surveyed more than 1,000 people in the U.S. about their views on the Boeing 737 Max, which has been grounded since March after a second deadly crash in five months.
Roughly 70% of survey respondents said they would hesitate to book a flight on a 737 Max today. But nearly two-thirds of them either never or seldom check the kind of plane they plan to fly on, the poll found.
Overall, the public's hesitation seemed to reflect "time to build confidence" rather than a "never-737 Max" view, UBS analyst Myles Walton and his team said.
"Only 12% of those who have some hesitation (suggested) that the hesitation would not be addressed with continued safe operation of the plane," the analysts said. "The net result is the survey suggests 8% of the flying public would never fly the 737 Max," they added, calling the impact "very manageable."
The findings are more or less in line with an IBD/TIPP poll in April that found a slim majority of Americans (51%) would avoid flying on a Boeing 737 Max once it has re-entered service, while a quarter (25%) were not at all likely to avoid the ill-fated jet.
Boeing Stock Analysis
Shares rallied 1.7% to finish at 344.62 on the stock market today but remain stuck below both their 50- and 200-day lines.
Boeing stock sank intraday in Monday's trade to the lowest since early January but closed at the top of the day's range. Shares hit a record 446.01 on March 1 and now sit 22% below that level. Boeing stock has a mediocre IBD Composite Rating of 70.
European rival Airbus (EADSY) rose 2.4%. The iShares U.S. Aerospace & Defense ETF (ITA) rose 1.9% and the SPDR S&P Aerospace & Defense ETF (XAR) gained 2.1% to bob back into buy range.
Boeing 737 Max Stigma To Fade
UBS analysts reaffirmed a buy rating on Boeing stock, saying they expect 737 Max groundings to end in July after new software gains FAA certification.
They went on to say: "The procurement outlook of an airline purchasing aircraft is five to 10-plus years. This long-range view is far different from the narrow window of the general flying public, so given the fade expected in the 737 Max stigma among consumers, we don't anticipate significant share erosion."
The Dow Jones stock was hit over the weekend by news that almost 150 parts inside the wings of more than 300 Boeing 737 jets may be defective and need replacing.
But CEO Dennis Muilenburg reassured investors that the company expects the grounded planes to be flying again by year end.
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