Boeing’s (BA+6.12%) stock jumped more than 6% after CFO Brian West gave upbeat remarks at the Bank of America (BAC-0.01%) Global Industrials Conference, saying the planemaker is on track with its key success factors for the year, according to a Bloomberg News report.
West highlighted progress on manufacturing, citing “fantastic” performance in its push to complete 38 aircraft per month and the stabilization of 787 output at five per month. He didn’t anticipate a material near-term impact from tariffs, but admitted to concerns about parts availability.
Wednesday’s increase means the company’s shares are trading roughly unchanged so far this year despite unresolved concerns about the effects of President Donald Trump’s imposed and planned tariffs. The company has many suppliers outside the U.S. and must keep prices contained to be able to effectively compete against Airbus (AIR+1.68%) in the commercial plane market.
CEO Kelly Ortberg told staff earlier this month that Trump’s tariffs would boost costs on parts like landing gear that are imported from Canada, Bloomberg News reported. Boeing has a Winnipeg-based division that makes more than 500 parts and assemblies for its commercial unit, and is a “tier 1″ partner on the 787 Dreamliner, which is assembled in South Carolina.
Boeing is also one of the top 10 manufacturers in Mexico and spends up to $1 billion in the nation through its supply chain, according to a company fact sheet. It spends more than $500 million in Mexico each year on commercial airplane parts.
Tariffs could create a “continuity of supply issue,” Ortberg said. Boeing’s aircraft are made up of thousands of parts subject to demanding specifications, so suppliers aren’t easily replaced. Aerospace expert Jerrold Lundquist recently noted that a Boeing 737 has about 2,000 parts sourced from 700 suppliers.
The CEO of the world’s largest aircraft leasing company, AerCap (AER+0.62%), said earlier that under the worst-case trade war scenario, the price of a 787 could increase by $40 million. “No one’s going to want to pay that,” Angus Kelley told told CNBC’s Squawk Box on March 12.
—William Gavin contributed to this article.
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