Wolfe Research Offers Thoughts on Boeing's (BA) Engine Failure Issue

Wolfe Research analyst Hunter Keay reiterated an Underperform rating and $165.00 price target on Boeing (NYSE: BA) after a UAL 777-200 suffered an uncontained engine failure soon after departing DEN on the way to Hawaii. The PW4000 was manufactured by UTX (now RTX) until 2017 and is/was used on many WB aircraft (747, 777, 767, A330, others) but this AD only applies to the PW4000-112 models used on 777-200 variants. The average age of the 128 B777-200 aircraft powered by PW4000 engines is high, at 20 years.

The analyst stated "Globally, there are 128 B777s that are impacted by this issue (69 in service, 59 in storage). Given there are 1,926 stored WBs on a global basis, airlines shouldn’t have trouble replacing lost capacity, assuming they want to." "It’s hard to know what happens next but we expect more information over the next 1-2 days. Obviously weak air travel demand means the global aviation industry can move slowly on this issue. And recent manufacturing issues on the MAX and the 787 should drive particularly cautious approaches by the FAA and aerospace OEMs. If this is a more serious issue it might accelerate WB-oriented decisions for UAL, who has 49 WB aircraft on order. It could simply just accelerate the exit of these 128 aircraft from the global fleet."

For an analyst ratings summary and ratings history on Boeing click here. For more ratings news on Boeing click here.

Shares of Boeing closed at $210.83 yesterday.

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