Reflecting renewed confidence in McDonnell Douglas Corp., some of the more aggressive members of the financial community have begun to buy the airplane manufacturer's stock again, causing its price to rise significantly for the first time since the crash last month of one of its DC10s in Chicago.
Airline industry analysts in New York said the "bargain-hunting" investors were reacting to two developments: the decision of European airlines to ignore U.S. Federal Aviation Administration grounding orders and put their DC10s back in the air, and increasing evidence that the cause of the Chicago crash of the DC10 may have been improper maintenance and not faulty design.
McDonnell Douglas stock, traded on the New York Stock Exchange, had dropped from $29 a share on May 25, the day of the fatal crash in Chicago, to $20 last week, admid reports that faulty design or construction could have caused the disaster in which 273 people were killed.
But the stock has begun to rise again, picking up a full point over the past two days to reach $23 7/8 at market close yesterday.
"I don't see this thing costing McDonnell Douglas more than $3 a share if it turns out that the problem is actually in the maintenance, or that it can be solved with a simple fix," said Wolfgang Demisch, an analyst with Smith Barney, Harris Upham Co.
Demisch said that if the FAA orders the firm to "take some heroic measures, more than common sense would indicate, if that is what it takes to restore public confidence in the plane, it will be a cheap price for the company to pay." Such a measure might involve a fix in existing DC10s and a design change in future production models.