After a plane crash in South Korea that killed many, Boeing Co.’s stock went down on Monday, but the company’s investors didn’t seem to care.
Stock BA -0.07% dropped more than 5% after the Jeju Air plane crash on Sunday, which killed 179 of the 181 people on board the twin-engine Boeing 737-800. The stock later recovered some of those losses.
It was the company’s 7.008% bonds that moved the most. Their yields widened two basis points from last week to this week. The move was mild because trade was light during the holiday-shortened week, as shown in the chart below from BondCliQ Inc., a company that provides data solutions.
One person in the market said, “The bottom line is the bond market doesn’t seem too bothered.”
Client flows show net buying of the company’s bonds by midmorning.
As the year goes on, more and more people are paying attention to Boeing after a panel on one of its 737 Max planes flew off on January 5 and forced an Alaska Airlines ALK -0.37% flight to make an emergency landing in Portland, Ore. Most of the world’s narrow- and wide-body planes are made by this company and Airbus AIR +0.26% EADSY -0.56% in Europe.
The Korean crash was the worst part of a tough year for Boeing. The company has more than $57 billion in bonds outstanding but is still losing money due to a string of production mistakes and a machinists’ strike that finished in November.
Boeing avoided a drop in its credit rating that would have put it in “junk” status when it raised about $21 billion in late October. This was enough to cover its cash needs through the first half of next year and pay off debts that are due in 2025 and 2026.
The company has promised that its new CEO, Kelly Ortberg, will cut jobs, sell assets, and end projects that aren’t making money as it works to get production back on track after the strike.
CreditSights analyst Matt Woodruff gave the bonds an outperform rating again in early December and said he thought they would keep their ratings at a low BBB level “and ultimately provide line of sight to ratings upgrades over the next several years.”
The S&P 500 is up 1% year-to-date, but the stock is down 32%. SPX -0.30% has gone up 24%.
