Boeing Company (The)

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Jul 192022

Boeing rides Delta’s jetstream

Boeing is floating on Cloud 9 after getting a much-needed boost from a deal with Delta Airlines.

  • BA flew ahead by 5% in intraday trading on Monday before paring those gains to close modestly down for the day. Shares are stuck in the doldrums this year, last month reaching their lowest levels since covid hit the market in March 2020.
  • Which is why this new deal is so exciting. Boeing received a firm order for 100 of its 737 MAX 10 jetliners from Delta Airlines at this year's Farnborough air show with an option to buy 30 more, which could mean a deal worth around $17.6bn and might help Boeing catch up after lagging behind rival Airbus – it’s the pair’s first major deal in 10 years.
  • Regulators pose a threat to happiness though. Boeing has a December deadline to get approval for the 737 MAX 10, or it must meet new cockpit alerting requirements under a new law and may have to cancel the order.
Liam Allport / Flickr

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Apr 282022

Boeing’s rough landing into Q2

Boeing prices get caught in a storm of earnings misses and disastrous Air Force One deals.

  • Shares plunged down 7.5% on Wednesday to their lowest price since November 2020. Boeing’s first quarter flew waaaay under the estimates radar with LPS of $2.75 (analysts expected $0.25 in LPS), on revenues that were down 8% to $13.99bn vs the $16.3bn analysts called for.
  • Losses widened as the brand took a $1.2bn hit in the quarter, from not only Russia’s invasion of Ukraine, but a bad deal with former President Trump. Boeing agreed to make two Air Force One jets for the president, but supply chain constraints got in the way big time – the fixed contract they agreed on meant Boeing took the financial hit for delays.
  • Plane deliveries were up to 95 from 77 the same time last year, and it said that it’s planning to ramp up 737 Max production to 31 per month in the current quarter. But, that news was outweighed by a halt in production for its 777 programme, which now won't start deliveries until 2025 and will incur a further $1.5bn in losses.
See all reported financials
Apr 252022

Boeing battles more delays

Boeing just cannot catch a break, now facing delivery delays for yet another aircraft.

  • The aerospace company may have to push deliveries for its new 777X program, now expecting to kick things off in 2024 for airport deliveries in early 2025, instead of 2023 – the two new models that are part of the program are set to be some of the biggest Boeing has ever produced (size wise, anyway).
  • This is the fifth delay the 777X service has experienced, initially planning to enter service in 2020, then 2021, then 2022… you get the point. The plane has been delayed for a variety of reasons, ranging from production and engine issues to the pandemic.
  • Boeing has been plagued with some bad luck recently. The brand is still performing triage on its 737 Max after their groundings, as well as on its 787 jet, and the stock is still sitting 44% lower than where it was before the pandemic.
Dirk Grothe / Flickr
Mar 222022

Boeing faces backlash after another crash

Another Boeing plane has been involved in tragic crash just as the company begins its recovery from its recent issue-filled past.

🔍 Key points:

  • A China Easter Airline Boeing 737-800 crashed in Southern China on Monday morning after a sudden plunge from cruising altitude with 132 people on board, and countries like India have already put all Boeing jets on “extreme surveillance”.
  • It’s not the same 737 MAX model that was grounded following two crashes in 2018 and 2019 – in fact the 737-800 has a v strong safety record. But, the 737 MAX has just started getting regulatory approvals to take back to the skies, so it’s really not what they need rn.
  • Its US-listed stock sank nearly 4% on Monday as investors considered the likelihood of increased regulatory scrutiny on the way, and its China-listed shares closed the day down 6.5%.
Aero Icarus / Wikimedia Commons
Mar 112022

The FAA lets Boeing on board

Boeing is no stranger to technical turbulence, but it’s finally getting back on the right flight path with the Federal Aviation Administration (FAA).

🔍 Key points:

  • The FAA is finalizing three safety directives for the grounded Boeing 777s that will allow the aircraft to take to the skies once again. It comes after an in-flight blade failure on a United Airlines 777 flight showered debris over nearby cities and had to land (luckily nobody was hurt though), getting the plane model grounded.
  • Clearly people are over the mishap though, given Ethiopian Airlines piled onto the good news with an order for 5 of the 777 freighters. With the Boeing 737 Max recently receiving regulatory approval to take off after two years on the ground, things are looking up for Boeing.
  • Alas, the airline industry is still suffering external setbacks. Barclays thinks that airline stocks could see a 22% downside while oil and gas prices continue to soar on the back of harsh sanctions against Russia – Boeing is down 13% for March so far, with United Airlines losing over 20% and Delta diving 18%.
Etienne Jong / Unsplash
Feb 012022

Boeing is winning back favor

Looks like Boeing’s rep is slowly regaining altitude with the airline operators of the world.

  • Prices flew 5% on Monday after enduring a decline of nearly 8% last week on the back of its third consecutive annual loss.
  • It just scored a surprise deal with Qatar valued at $34bn. The airline will buy nearly 60 planes from Boeing with an option to up that order – 34 of the planes will be 777X freighters, representing the first customer for the new cargo plane.
  • The deal takes Boeing ahead in its rivalry with Airbus (AIR), which recently had its own deal with Qatar cancelled. Boeing is banking on its shiny new cargo plane to help it recover from covid and its flight crashes – and it’s off to a good start.
Steve Lynes / Wikimedia Commons
Jan 272022

Is Boeing nearing a post-pandemic lift off?

Boeing is on the way to earning its post-pandemic wings, but it keeps getting clipped by plane defects.

  • It reported its third consecutive annual loss and dramatically missed on both ends. It reported LPS of $7.69 compared to the $0.42 analysts expected, on revenues of $14.8bn compared to estimates of $16.6bn.
  • On the plus side, it also generated cash in Q4 for the first time in almost three years thanks to a jump in 737 Max deliveries in 2021, after the plane was grounded for ages in the wake of two deadly crashes. There are other planes to worry about though…
  • Its 787 Dreamliner jet deliveries are stalled with “no end in sight” after manufacturing flaws paused any customer handovers – the airline just disclosed $5.5bn in costs associated with the changes.
See all reported financials
Jan 142022

China lets Boeing back into their skies

The Boeing 737 Max is finally within weeks of its return to the skies of China after regulators give it the all-clear.

  • Shares flew over 4% in Thursday morning trading, closing the day at a nearly two-month high.
  • The 737 Max has been given full regulatory clearance to spread its wings almost three years after two fatal crashes got the plane grounded worldwide, and you can expect take-off in the next few weeks.
  • China was the first to ground the plane in 2019, so investors are hoping others will follow their lead in re-authorizing the aircraft. Prices are down nearly 50% since the first accident, though some of that is thanks to covid.
Emiel Molenaar / Unsplash
Oct 282021

Boeing can't outfly its Dreamliner woes

Boeing missed expectations on both the top and bottom lines with its third quarter earnings release, reporting a loss per share of $0.60 on revenue on $15.28 billion, compared to forecasts of $0.20 in losses per share on $16.3 billion in revenue. The biggest obstacle to Boeing’s is still its 787 Dreamliners – the plane has been suspended for just under a year as the airline company deals with a bunch of manufacturing flaws, which has led to months of suspended deliveries.

The cost of repairing the flaws is estimated to be around $1 billion in abnormal costs, $183 million of which was written down in the third quarter, but the FAA has yet to close the investigation into Boeing so there’s a chance things could get worse. Boeing President and CEO David Calhoun said:

Commercial market demand continues to gain traction with broad-based vaccine distribution and border protocols beginning to open. Going forward, supply chain capacity and global trade will be key drivers of our industry and the broader economy's recovery.

Analysts aren’t satisfied, with Vertical Research Partners analyst Rob Stallard pointing to a lack of FAA clarity as a source of doubt, and Nick Cunningham, a financial analyst with Agency Partners, saying:

With all three major commercial aircraft programs in various degrees of serious trouble, extremely high debt and cash still flowing out, we do not think Boeing's valuation yet reflects the seriousness of the situation.

Boeing ended Wednesday down 1.54% at $206.61, its lowest closing price since early February.
Jul 292021

Boeing shares take off after positive earnings surprise

Shares of leading aircraft maker Boeing jump 4.18% after the company reports a profit despite its pandemic slump.

Nobody was really expecting the aircraft maker to turn over a profit this quarter, considering how many factors have been dragging it down, but it surprised with its first profit in nearly two years nonetheless and got rewarded with a jump of 4.18%. Boeing beat on the top and bottom lines, reporting earnings per share of $0.40 on revenues of $17 billion, compared to expectations of a loss of $0.83 cents on $16.54 in revenue.

The report put an end to six consecutive quarters of losses, making its return to profit territory and turning over $567 million for the Q1 from a net loss of $2.96 billion this time last year – talk about a comeback. Revenue was up 44% from $11.8 billion a year before, propped up by a surge in deliveries for its commercial jetliners as the world has started to recover from COVID and travel back in style. Granted, this time last year the world was holed up in their homes as the Coronavirus waged on around us, so the year-ago comparison gives the numbers a glam filter, but the comeback is impressive nonetheless.

Its first quarter back in positive territory was cause for celebration not only for investors, but for the staff of Boeing too, 10,000 of whom had their jobs saved by the surprise profit. The aircraft maker has around 140,000 employees, down from 160,000, but stability and lifted travel restrictions mean that those employees are able to stay.

But Boeing still has a long road ahead. The company recently released its first sustainability report, and given the 3% of man-made CO2 emissions that aviation is responsible for, has pledged to cut carbon emissions to 50% of 2005 levels by 2050. On top of that, it’s facing ongoing obstacles to its 737 and 787 jets as regulators scrutinize the company after its 2019 crash. Sounds like it’ll need every employee it can keep.
Jul 142021

Bad news for Boeing as Dreamliner deliveries stall

Boeing shares closed down over 4% on Tuesday after the airline carrier cut the delivery rate for its 787 Dreamliner to deal with (yet another) production issue.

Boeing started the day in a slump after having to severely cut its delivery target and temporarily lower production rates for its 787 Dreamliner planes due to a problem with some of the wide-body jets. Last year, Boeing first disclosed incorrect spacing in some parts of certain 787s, including the fuselage, and halted deliveries for five months. After resuming 787 Dreamliner deliveries in late March and starting to reduce the number of parked airplanes that had thanks to the delay, Boeing delivered just two of the jets in May — and then the FAA made it halt deliveries again because of doubts over how it was carrying out its inspections. CEO David Calhoun said in June that the company hoped to deliver the “lion’s share” of the 100 or so parked and available 787 Dreamliners to airlines customers by the end of 2021, but the FAA is once again insisting that Boeing halt all deliveries to fix yet another issue near the nose of the plane. Now, Boeing anticipates delivering less than half of its inventory this year, as the company races to fix the production errors.

It looks like the newly discovered defect will take at least three weeks to address, which means that it probably won’t get the aircrafts out before summer as travel begins to bounce back. Airlines are already racing to keep up with increased travel demand, so this could put Boeing well behind.
Jun 292021

A bumpy week for Boeing

Prices of Boeing are seeing some turbulence, falling to the bottom of the Dow Jones Industrial Average due to delayed approval for its 777X, but then getting a lift in pre-market Tuesday trading after news of a massive order.

Hang on tight because it’s been a bumpy ride for Boeing, which started off the week down 3.39% on Monday following some bad news from the Federal Aviation Administration (FAA), who told the company that it was unlikely to get approval for its latest 777X jet for commercial service until at least mid 2023. The approval has been in limbo for 9 months, and according to the FAA’s latest letter to Boeing, the delayed decision was due to a number of outstanding technical issues that the aircraft maker needs to resolve. Prices reacted badly, and the stock fell to lead the losers of the Dow Jones Industrial Average. Possible a slight overreaction considering that Boeing was aiming for mid-2023 anyway.

We are still confident we will be certified in the fourth quarter of 2023. We’ve incorporated all the timeline learning that we could possibly incorporate from the MAX and the architectural preferences that both the FAA and the (European regulator) has embedded in their regulations.

said Calhoun in early June.

However, things started to look up in pre-market trading on Tuesday, which saw prices lift on signs that Max deliveries are finally starting to recover after fatal crashes grounded the Boeing 737 Max in 2019. The 777X will be the first major jet to be certified since then, so it's likely to receive heightened scrutiny from safety regulators. United Airlines (UAL) has faith though, and recently announced its largest aircraft order ever, valued at $30 billion, made up of 200 Boeing aircraft and 70 from rival Airbus.
Apr 282021

Boeing's sixth quarterly loss

Boeing posts its sixth consecutive quarterly loss as it continues to face production issues and a weak market - although there’s hope that 2021 could be a turning point as people get vaccinated and start traveling again.

Boeing reported a loss per share of $1.53 on revenue of $15.22 billion, compared to expectations of a $1.16 loss per share on $15.02 billion. The company saw a total net loss of $561 million, 10% lower than the same period the year before, but still ahead of estimates.

CEO Dave Calhoun is still hopeful for the rest of 2021, especially given that the domestic U.S. market is already seeing the return of air travel with a full recovery expected by early 2022. However, he warned it could be another two to three years before the global situation improves.
Apr 262021

Exec shake-up

Boeing recovers slightly from the turbulence that hit following its recent exec team shake-up, with a 1.28% jump on Monday after a bad end to the week.

On April 20, a shock announcement sent Boeing into a stock nose dive after the company made some major changes to its future leadership: pushing back CEO David Calhoun’s retirement by five years, and getting rid of Gregory Smith, who everyone thought would take over as CEO. The price lost over 4% on the news, rounding off a tough couple of days that saw the stock lose almost 8% since April 14.

Calhoun has seen Boeing through one of the worst years in the company’s history – despite winning a flurry of orders in December, Boeing’s aircraft delivery numbers dropped by nearly 60% over the year to just 157 - a third of the amount delivered by rival Airbus in the same period.

Calhoun started his role as CEO not long before the pandemic started, and the company was already in crisis following two fatal crashes that led to the grounding of the 737 Max. Given he’s kept the company up in the air over the past year, perhaps it’s only right that he gets to stick around to watch the expected rebound. Boeing’s mandatory retirement age is typically 65, which Calhoun hits next year, but the age has been raised to 70 as the company battles with the effects of COVID.

The retirement of CFO Gregory Smith is what sent the stock spiralling last week though, as most had expected him to take over as CEO. Smith served as CFO for over a decade and was the interim CEO before Calhoun took over in 2020. Over the past few years he has been a big contributor to helping the company raise debt to weather the crash and COVID crisis - including a $25 billion bond issuance last year, the largest deal outside of an acquisition in aviation history. Boeing says it's currently on the lookout for a replacement.

“The retirement is a loss for BA, in our view, with big shoes to fill for the potential successor,”

said Sheila Kahyaoglu, a Jefferies aerospace analyst.
Mar 252021

Ready for takeoff

Boeing (BA) is set to start delivering its 787 Dreamliners as early as March 26, ending a five-month drought while the company mechanics looked for tiny structural flaws. Better safe than sorry with those crazy flying contraptions, we always say. Prices lift 3.32% on the news.

Boeing is looking to hand over up to three jets this month after cutting its planned 2021 787 production goals from six jets to five, monthly, in the face of the slow recovery of the long-haul travel sector.

In 2019, Boeing was making 14 Boeing 787s monthly, but amid the pandemic the firm delivered just 53 jets in 2020, which is less than five monthly on average. The delivery slowdown led to a swelling of the company’s jet stockpile, which currently stands at about 80. Boeing burned through $20 billion last year, so the ability of the planemaker to generate cash in the coming years does depend on how quickly it’s able to unwind its stacked-up jets. However, there is a concern that customer airlines facing their own cash flow problems might look to defer delivery and change their payment schedules, which could have a knock on effect on Boeing.

The 787 might be struggling, but other Boeing jets have done rather better, particularly the 737 MAX jet, which is key to the company’s financial recovery in 2021. Boeing has already exceeded 50% of its 2019 figure just a few months into the year, with 26 deliveries in January alone, and customers have been eating them up. Can the company begin to take back the market share it lost while grounded? In order to get back to its 2018 levels of profitability, Boeing will have to get back to pre-2019 order numbers and manufacturing levels, which could still be a while away.

Boeing’s $63.5 billion debt burden might also be a worry to investors, but there’s an expectation that the debt ballooning could soon cease - and hopefully its $25 billion in cash, equivalents, and short-term investments will give the company blue skies back to profitability.