Boeing 787s ‘Being Prepared in Anticipation of Delivery’ – Citi

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Citi analyst Charles Armitage said in a note to clients Friday that recent data suggests Boeing (NYSE:BA) is optimistic regarding FAA clearance of the 787 aircraft.

In May 2021, Boeing suspended deliveries of the 787 after the FAA raised concerns about the proposed inspection method.

However, Armitage, who has a Buy rating and $209 per share price target on Boeing, said Citi recently observed a small number of 787s being moved out of storage facilities, taking several local flights, starting and finishing in the same State. The analyst said this is typical practice for an aircraft to have two to three local pre-delivery flights.

“~4 of the planes we tracked had multiple short, same State flights,” wrote Armitage. “We have observed the same set of planes, 3 American Airlines, 1 British Airways, continuing to take short local flights. While we still do not propose a specific time frame for 787 deliveries, we reiterate our view that these planes are being prepared in anticipation of delivery. To us, this would indicate that Boeing are optimistic regarding FAA clearance.”

However, Armitage’s comments contrast Morgan Stanley analyst Kristine Liwag who said yesterday that the US DOT audit of FAA oversight of Boeing 737 and 787 production is “incrementally negative for BA.”

Liwag, who has an Overweight rating and $215.00 price target on Boeing, told investors that it “potentially incentivizes added FAA scrutiny at a time when BA is seeking approval of the 787 and is facing supply chain constraints on the MAX production line.”