✈ Boeing: Perennial Rough Weather?

Facebook rips on a massive quarter. Apple crushes earnings expectations.

Apr 29, 2021

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🛫 Boeing: Perennial Rough Weather?

Boeing on Wednesday reported its sixth straight quarterly loss. The management continues to put up a brave face despite the substantial hits the company has endured over the past couple of years. The company can’t seem to wait to turn a page in the right direction! (Tweet This)

Background

Two major air crashes within five months, 346 deaths, grounding of its best-selling plane, regulatory and governance issues. And then the pandemic that dealt a body blow. All of this meant the company reported record losses for 2020 amounting to $12B.

After several safety-related changes, more redundancy and additional pilot training, the FAA finally cleared the 737 MAX to fly again in November last year. Since then, the company has delivered 85 MAX planes to customers, 21 airlines have returned their MAX fleets to service and more than 26,000 commercial flights have been safely flown.

Just as things seemed to finally get back on track, an issue with one of the suppliers for the modified 747 planes that are used as Air Force One came to the fore, causing further embarrassment to the once high-flying company.

What Happened?
While the increased acceptance by airlines in the first quarter meant the company performed better than expectations in terms of revenue, it still fell far short in terms of profitability.

Key Q1 stats:

Revenue: $15.22B Vs. expected $15.02B
EPS: Loss of $1.53 (adjusted) Vs. expected $1.16

Overall, the company lost $561M in Q1. However, as vaccinated passengers get ready to travel, airlines are placing new orders. Southwest Airlines, United Airlines, and Alaska Airlines lined up in Q1. Just last week, Dubai Aerospace Enterprise came in with its order. The order backlog for the company now stands at 3200 planes. So far so good, you would think. And that’s when turbulence reared its head!

A key supplier to the planes that are built to become Air Force One became insolvent and cost Boeing $318M. Separately, earlier this month, dozens of Boeing 737 MAX jets were suspended from service due to electrical safety issues. Nearly 100 in-service planes are impacted and deliveries have been paused. The reworked planes will need to be certified by the FAA again.

The management believes the company is at an inflection point and harbors hope of turning cash flow positive in 2022. Will Boeing’s investors have a smooth flight from here on or should they prepare for mid-air turbulence? Either way, it’s seat belts on for some time to come.

Market reaction
BA closed the day at $235.46, down 2.89%; the shares are up 66% in pre-market trading.

Company Snapshot 📈

BA $235.46 -7.01 (-2.89%)

Analyst Ratings (27 Analysts) BUY 48% HOLD 33% SELL 19%

Newsworthy 📰

Titan: Apple soars past sales, profit targets, warns of chip shortages (AAPL -0.60%)
Countdown: Facebook benefits from pandemic ad spending but Apple could spoil its party (FB +1.16%)
Chipped: Ford says chip shortage to halve Q2 vehicle output, but could ease this summer (F -0.48%)

Later Today 🕒

After Market Close: Amazon.com Inc Earnings (AMZN)
Before Market Open: AllianceBernstein Holding LP Earnings (AB)
Before Market Open: Bristol-Myers Squibb Co Earnings (BMY)

Fun Fact of The Day 🌞

Mount Everest grows 0.1576 inches (about four millimetres) each year

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