Boeing has a safety problem. Why the stock is winning.

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The Federal Aviation Administration will be looking at how Boeing handles safety-related communications with it, but the stock is not responding, for good reason.

The review, reported Monday evening by The Wall Street Journal, comes after a small investigation, conducted by the FAA, found that about a third of those polled in the company reported difficulty being transparent with the regulator.

Boeing stock (ticker: BA) was up about 1.3% in morning trading on Tuesday. The

S&P 500

had increased by about 0.3%. The

Dow Jones Industrial Average

gained 0.2%.

Safety is paramount in the aerospace industry, but the lack of reaction from the stock makes sense. Boeing has struggled with safety concerns for about two years after the 737 MAX jet came to a global standstill in March 2019.

The MAX is back in most countries around the world. But the crashes that resulted in its grounding and the recertification process led to increased scrutiny by Congress, new laws regarding aircraft certification, and a change in leadership at Boeing. Former CEO Dennis Muilenburg has been replaced by current CEO Dave Calhoun. And while all of this was going on, Boeing created a board-level committee dedicated to safety oversight.

All of this means that to some extent the FAA letter is looking backwards for investors. Much safety news is already reflected in Boeing’s share price. Stocks are down about 50% from their all-time high.

Airbus

(AIR. France), for comparison, is down about 20% from its peak.

What matters in the letter is the reaction of Boeing’s new management.

“We take these matters very seriously and we are continually working to improve the processes we have in place to ensure the independence of the [FAA-related] members, ”Boeing said in an emailed statement. The company admitted to receiving the letter, but declined to release it to the public. The FAA was not immediately available for comment.

Boeing added in its statement that the company has worked hard to create a culture of open communication and that it has told staff that employees responsible for communicating directly with the FAA should be accorded the same respect and deference as the company. grants to the regulator itself.

Barron recently wrote positively about Boeing stocks, believing that if Calhoun takes the right steps, including changing the corporate culture to once again emphasize engineering excellence, stocks could win. This article appeared earlier in August. Shares have fallen around 6% since then.

Airbus

stocks are down about 3%. News about the Delta variant of Covid-19 and concerns about its impact on travel and aircraft demand appear to be weighing on both stocks.

Write to Al Root at [email protected]