The Dow Jones Industrial Average (DJINDICES:^DJI) was the only major U.S. stock index in positive territory Tuesday morning. The Dow was up just 0.17% at 10:50 a.m. EST as the markets continued to digest the optimistic vaccine news announced on Monday. Both the S&P 500 and the tech-heavy Nasdaq Composite were down substantially.
Boeing (NYSE:BA) was helping to drive the Dow higher following a report suggesting that U.S. regulators would approve the 737 MAX for a return to service this month. Meanwhile, shares of Disney (NYSE:DIS) moved in the opposite direction as it became clear that Disneyland in California would not reopen in the near term.
Boeing 737 MAX approval imminent
The Boeing 737 MAX was grounded worldwide in March of 2019 following two fatal crashes that were linked to a faulty flight control system. Getting the plane back in the air has been a long process, to say the least.
It now appears that that process is coming to an end. Reuters reported late Monday that the U.S. Federal Aviation Administration expected to complete the final stages of reviewing the changes made to the 737 MAX soon. Reuters’ sources cited Nov. 18 as the earliest date the FAA could lift its grounding order.
Once the FAA gives Boeing the go-ahead, software updates and pilot training will take at least 30 days. It may take substantially longer for airlines to get passengers back on the planes — Southwest Airlines doesn’t expect to be scheduling flights on the 737 MAX until the second quarter of 2021.
The return of the 737 MAX is complicated by extremely weak demand for air travel due to the COVID-19 pandemic. The number of passengers going through TSA checkpoints daily is still down around two-thirds compared to last year, and the situation could get worse this winter as the virus surges in the U.S. and Europe.
An effective vaccine may be widely available sometime next year, which would presumably lead to a surge in travel demand as the pandemic comes to an end. It may take until then for the 737 MAX to return in numbers to the skies.
Shares of Boeing were up about 4.2% Tuesday morning. The stock is still down about 40% since the start of the year.
Disney forced to furlough additional workers
Disneyland in California is still not open, and it doesn’t appear the park will be welcoming guests anytime soon. While Disney has been able to reopen Disney World in Florida, California’s strict reopening guidelines for theme parks have kept Disneyland shuttered.
In a letter to employees on Monday, Disneyland President Ken Potrock announced additional furloughs to reflect the fact that a Disneyland reopening isn’t in the cards in the near future. “We expected to be able to open our parks in Anaheim, given our proven ability to operate with responsible health and safety protocols as we have in all of our other theme parks around the world, but unfortunately this has not been the case,” said Potrock.
While Disney World is open, the park is still operating at a reduced capacity. It may take an effective vaccine for Disney to be able to return to pre-pandemic attendance levels, and for would-be guests to feel comfortable flying to the company’s parks.
Shares of Disney were down about 2.7% Tuesday morning. The stock has lost about 4% of its value this year.