Boeing Gets Good News From Engine Supplier Rolls-Royce

Text size

Rolls-Royce

engineers some of the finest machines on the planet. But it doesn’t make cars.

BMW

owns the Rolls car brand. The publicly traded Rolls company makes huge aircraft engines, the kind that power a

Boeing

787. It is a key aerospace supplier, and it had some good news for the companies it supplies recently.

This week, Chris Cholerton, president of

Rolls-Royce
’s
(ticker: RR.London) civil aviation division, said interest in new wide-body jets is picking up, according to the Financial Times. Airlines are looking for more, and bigger, jets from 2025 owwards.

Rolls didn’t immediately respond to a request for comment about the report.

Boeing

stock (BA) wasn’t getting a bump from the bullish outlook from Rolls in premarket trading Friday. Shares are down about 0.3%, at $139.50. S&P 500 futures were down 0.5%. Dow Jones Industrial Average futures were down 0.1%.

More jet demand is good for both Boeing and

Airbus

(AIR.France). It’s especially good for Boeing. The U.S. aerospace giant leads in market share for wide-body, twin-aisle jets.

Airbus

leads the market in single-aisle jets where models such as the A321 NEO and Boeing’s 737 MAX compete.

Wide-body jets are used on the longest routes, usually international travel that traverses an ocean. Demand for international travel has been slower to recover than shorter, domestic routes in the aftermath of Covid-19.

In March 2022, before Covid lockdowns hit Chinese domestic travel, the International Air Transport Association reported that international travel was at about 48% of prepandemic levels. Domestic air travel was at about 77% of prepandemic levels.

A pickup in international travel should be a tailwind for Boeing stock.

It could use it. Boeing shares are down about 30% year to date partly because the company has struggled with internal issues affecting its 787, 737 MAX 10, and 777X planes.

The 737 MAX 10 is the longest version of the MAX and is waiting to be certified by aviation authorities. The 777X is the newest version of the popular 777 jet. It needs to be certified as well. The 787 jet isn’t being delivered right now, as Boeing works through some manufacturing quality problems.

Boeing shares are also down because global air travel recovery has been slower than expected.

Airbus

shares are down about 15% this year. Rolls-Royce shares are down about 30% this year as well.

Write to Al Root at allen.root@dowjones.com