GolfFishSurf
1 week ago
Looks like it should drop below $100, yet it is up today. No idea how......
RPT-Strike could cost Boeing $100 million-plus in daily revenue, analysts say
05:30:00 AM ET, 09/17/2024 - Reuters
(Repeats with no changes to text)
By Shivansh Tiwary
Sept 16 (Reuters) - Boeing could lose over $100 million in daily revenue until it reaches a settlement with its union that represents more than 30,000 workers, analysts said on Monday.
The Seattle-area Boeing workers who build the planemaker's most popular 737 MAX and other jets in factories on the U.S. West Coast went on strike after rejecting their first full contract in 16 years last week.
A prolonged strike could cost several billion dollars, fraying the planemaker's already strained finances and threatening a downgrade of its credit rating.
The strike, Boeing's first since 2008, is the latest event in a tumultuous year for the company that began with a January incident when a door panel detached from a new 737 MAX jet mid-air. Shares have lost roughly 40% in value so far this year.
Northcoast Research estimates the total impact of the strike could reach $3 billion or more. "Boeing will most likely remove 33-35 jets from the original production plan, resulting in a loss of $102 million in daily revenue," said Chris Olin, an analyst at Northcoast Research.
New CEO Kelly Ortberg is now confronting a labor-management battle just weeks after he was brought in to restore faith in the planemaker, which is also facing heavy scrutiny from U.S. regulators for its safety practices.
Last week all three major ratings agencies warned that a prolonged strike could cost the company its investment-grade rating. That would increase borrowing costs for Boeing, which already has a $60-billion debt pile.
"We estimate the strike will pare sales by more than 2008's nearly $100 million per day since current volumes are higher," TD Cowen analyst Cai von Rumohr said.
Boeing's finances are already under pressure due to negative free cash flow and poor margins. The planemaker needs to generate sufficient cash flow to meet payments on its debt.
On Monday, Boeing said it was freezing hiring and weighing temporary furloughs to keep costs in check.
Each revenue slip of more than $100 million per day will pare $60 million in cash, since the planemaker receives 60% of a plane's price upon delivery, TD's von Rumohr said.
Jefferies analysts say the strike would amount to a hit of about $1.3 billion in monthly free cash flow.
(Reporting by Shivansh Tiwary and Nathan Gomes in Bengaluru; Additional reporting by Utkarsh Shetti; Editing by Shounak Dasgupta)
gfp927z
2 weeks ago
>>> Boeing Risks Being Cut to Junk as Strike Hurts Production
Bloomberg
by Julie Johnsson and Olivia Raimonde
September 13, 2024
https://finance.yahoo.com/news/boeing-risk-being-cut-junk-163804703.html
(Bloomberg) -- Boeing Co. is at risk of losing its investment-grade credit rating as the embattled planemaker faces the prospect of a drawn-out strike by workers that will further disrupt production and cash flow.
The credit score on Boeing’s unsecured debt has stood at Baa3 with Moody’s Ratings since April. Moody’s said in a statement on Friday that it’s reviewing the ratings for a possible downgrade and that it “will assess the strike’s duration and impact on cash flow and the potential equity capital raising Boeing may undertake to bolster its liquidity.”
Boeing has been fighting to hang on to its investment-grade rating, a mission that’s now been complicated by the strike called by workers overnight. The company has more than $45 billion in net debt and has been bleeding cash after it was forced to pare back output in the wake of a near catastrophic accident in January.
A descent into junk territory would increase Boeing’s borrowing costs at a time when it’s struggling to turn around its commercial and defense operations. Boeing has also been losing money on some defense contracts, and its space business has been dogged by delays and cost overruns. The company has $4 billion of debt coming due in 2025 and also $8 billion coming due in 2026, according to Moody’s.
There are other financial consequences to a junk downgrade, such as a smaller pool of investors willing to buy a company’s debt. Two credit graders must lower a company to speculative grade before its debt leaves the investment-grade index and is no longer considered high grade.
Chief Financial Officer Brian West told analysts at a Morgan Stanley conference on Friday that the company will consider necessary steps to shore up its balance sheet. The planemaker is evaluating its capital structure to ensure it can meet its upcoming debt payment over the next 18 months, he said.
“We remain committed to manage the balance sheet prudently,” West said at a conference. “We want to prioritize the investment grade credit rating.”
About 33,000 workers at Boeing’s main sites in the Seattle area voted last night to reject a new labor accord and go on strike. Boeing has said it’s willing to get back to the negotiating table, after offering a 25% pay increase alongside other sweeteners. It’s unclear how long and disruptive a strike might be, and the union leadership has also said it’s willing to resume talks.
Fitch Ratings also said on Friday that Boeing’s investment-grade rating has “limited headroom for a strike.” Like Moody’s, Fitch has Boeing on the lowest rung above speculative grade. The same applies for Standard & Poor’s, which rates Boeing at BBB-.
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4 weeks ago
Boeing Forecasts China Plane Fleet to Double by 2043
By: MT Newswires | August 27, 2024
Boeing BA said late Monday that it expects China's commercial airplane fleet to more than double by 2043 to meet rising demand.
China's fleet will grow at a 4.1% annual rate, from 4,345 to 9,740 airplanes, by 2043, Boeing said, citing its 2024 Commercial Market Outlook for China report.
Annual passenger traffic will grow 5.9%, outpacing the global average of 4.7%, the company said.
Boeing said China will account for the world's largest traffic flow and will have the world's largest fleet of widebody jets as its freighter fleet triples.
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1 month ago
Boeing Faces Near-Term Risks From Upcoming Union Labor Contract Expiration
By: MT Newswires | August 22, 2024
Boeing BA faces potential near-term risks from the upcoming expiration of the union labor contract with 32,000 IAM 751 members on Sept. 13, UBS said in a note Thursday.
In the event of a strike, UBS outlines three potential scenarios, with the worst-case scenario involving an over two-month-long strike, potentially halting deliveries of key aircraft models like the Max, 777, and 767, leading to severe financial repercussions.
A failure to reach an agreement could lead to a strike, significantly impacting aircraft deliveries and creating an $8 billion cash flow headwind, the investment firm said.
Boeing's free cash flow estimates for 2024 to 2028 could be affected by wage increases, with an up to 6% potential impact depending on the scale of union wage increases, ranging from a 14% step-up to a 40% step-up, UBS said.
Despite these risks, UBS notes that even if a strike does not occur, Boeing will likely still face higher wage costs, leading to an estimated $1 billion increase in annual union wages by the end of the decade.
UBS had a buy rating for Boeing with a price target of $240.
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1 month ago
Boeing Delivers 43 Airplanes in July As Production Recovers
By: News Wires | August 13, 2024
Boeing delivered 43 airplanes in July, a second straight relatively solid month for the jet maker as it works to ramp up production amid supply-chain glitches and in the wake of January's Alaska Airlines door-plug blowout. That total included 32 737 jets, three fewer than Boeing delivered in June but higher than earlier in the year when it was delivering between 15 and 25 narrowbodies per month. Deliveries included six 787s, four 767s and one 777 freighter. Boeing's backlog is now 5,477, down from 5,506 at the end of June.(sharon.terlep@wsj.com)
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2 months ago
Boeing Incoming Chief Faces Sizable Challenges, Opportunities in New Job, RBC Says
By: MT Newswires | August 1, 2024
Boeing's BA selection of Kelly Ortberg as new chief executive brings "the right mix of industry knowledge and relationships," and an outsider's perspective, RBC Capital Markets said in a note.
Selecting an outsider is important for cultural and operational shift at the company, following a string of recent problems, the brokerage said Wednesday.
"We believe the 'to do' list will be substantial, but expect the focus for investors now to shift to the long-term [free cash flow] upside as Ortberg eventually takes ownership of the day-to-day operations of the company and looks to reset the mid- and long-term expectations," the analysts said.
One such opportunity is a new contract between Boeing and union employees represented by the International Association of Machinists and Aerospace Workers. The contract is slated to expire Sept. 12, although RBC said a strike is unlikely. But, a deal will provide a positive catalyst for Boeing, especially if the company plans to increase deliveries in the second half.
RBC raised price target for Boeing to $220 from $210, while reiterating outperform rating.
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2 months ago
Boeing Stock Rises After C-Suite Shakeup, Earnings
By: Schaeffer's Investment Research | July 31, 2024
• Boeing announced a new CEO, and the news is overshadowing an earnings whiff
• Boeing's second-quarter report were below Wall Street's estimates
Boeing Co (NYSE:BA) shares are up 1.6% to trade at $189.81 this morning, after the blue-chip aerospace manufacturer announced a new CEO and second-quarter results.
The company's loss of $2.90 per share and revenue of $16.87 billion both missed expectations, but BA is getting a boost after it was announced that Robert "Kelly" Ortberg is slated to replace Dave Calhoun as CEO. Ortberg formerly led aerospace supplier Rockwell Collins -- now part of RTX (RTX) -- and boasts more than 30 years of experience.
Options traders are chiming in following the results. So far, 15,000 calls and 8,046 puts have crossed the tape, which is triple what is typically seen at this point. Most popular is the weekly 8/2 195-strike call, followed by the 200-strike call from the same series.
Boeing stock is up off its April 25 multi-year lows of $159.70, but has been mostly range bound since early May. Though pacing for its fourth win in five sessions, BA is still down 27.4% in 2024.
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2 months ago
Boeing (BA) Q2 Earnings Coming Up: Should You Buy or Sell?
By: Zacks Investment Research | July 29, 2024
The Boeing Company BA is scheduled to release second-quarter 2024 results on Jul 31, before market open.
The Zacks Consensus Estimate for revenues is pegged at $17.49 billion, implying an 11.4% decline from the year-ago quarter's reported figure. The consensus mark for second-quarter earnings is pegged at a loss of 1.68 per share, suggesting a deterioration from a loss of 82 cents reported in the prior-year quarter. The bottom-line estimate declined significantly in the past 60 days.
Zacks
Boeing has a solid earnings surprise history. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 17.83%.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
BA has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.98%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors to Consider
Solid Expectations From Global Services Business
We remain optimistic about Boeing Global Services’ (“BGS”) top-line performance in the second quarter, as steadily improving global commercial air travel is likely to have bolstered fleet utilization, thereby boosting commercial jet services volume.
In the first quarter, the BGS business opened a maintenance facility in Jacksonville, FL, to support Boeing’s military customers. Operational efficiencies achieved in this facility might have aided the BGS unit’s bottom-line performance in the second quarter.
The Zacks Consensus Estimate for the unit’s revenues is pegged at $5,049.3 million, indicating an improvement of 6.4% from the year-ago quarter’s reported number. The consensus mark for earnings is pinned at $947.6 million, indicating solid growth of 10.7% year over year.
Poor Commercial & Defense Deliveries to Hurt Q2 Results
Boeing’s second-quarter deliveries reflect a 32.4% decline in commercial shipments from the year-ago quarter’s reported figure. Also, defense shipments deteriorated 26.3% year over year.
For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting its revenue growth.
So, the top-line results from both its commercial and defense business segments are expected to reflect a dismal year-over-year performance.
The consensus estimate for Boeing’s commercial business segment’s top line is pegged at $6,340 million, implying a 28.3% decline from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the defense unit’s revenues is pegged at $6,305 million, indicating a decline of 2.2% year over year.
Overall Picture
Considering the fact that Boeing’s military and commercial revenues accounted for almost 76% of its total revenues as of 2023-end, the notable decline in delivery figures for both the commercial and defense shipments is likely to have hurt the company’s overall second-quarter top-line performance, outweighing the positive revenue contribution from the BGS unit.
On the bottom-line front, abnormal costs in relation to inspections and rework costs on inventoried 787 aircraft, along with the adverse impacts of supply-chain challenges, are likely to have hurt BA’s quarterly earnings.
Price Performance & Valuation
Boeing’s shares have exhibited a downward trend, losing a notable percentage over the year-to-date period. Specifically, the stock plunged 28.3% year to date, underperforming the Zacks aerospace-defense industry’s decline of 6.1%.
Boeing’s YTD Performance
As evident from the image, other notable stocks from the same industry outperformed BA’s performance. Shares of Lockheed LMT and Embraer ERJ rallied 15.7% and 58.7%, respectively, year to date, while that of Airbus EADSY lost 8.1%.
From a valuation perspective, Boeing is trading at a discount when compared to its industry. Currently, BA is trading at 1.32X forward 12 months earnings, which is lower than the industry’s forward earnings multiple of 1.56X. The stock is also trading lower than its five-year median of 1.44.
Price-to-Sales (forward 12 Months)
Investment Thesis
Despite commercial air travel statistics currently being in favor of jet makers like Boeing, persistent quality control issues with its 737 program have been putting a big dent in the company’s quarterly results lately. Subsequent inspections and quality checks for this model of aircraft, along with supplier shortages of a few key parts of 787 jets, are likely to have played the role of major growth deterrents for this jet giant in the second quarter.
The only silver lining among these adversities is the growth expectation from its global service business. However, this unit alone does not boast the capacity to take Boeing on a swift ride.
The poor delivery performance of its commercial and defense units is also taking a toll on its cash balance, thereby limiting its financial prowess. This is evident from its return on invested capital
ROIC
compared to that of its industry.
Should You Buy or Sell BA?
With Boeing’s current ROIC being a negative, indicating that its investments are not generating sufficient returns to cover its costs, investors should refrain from buying the stock before Wednesday. Investors have already been losing confidence in this stock, as evident from its year-to-date price performance. Its second-quarter results are not expected to make any major upturn, considering the downward revision in its earnings estimates as well as a negative Earnings ESP.
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2 months ago
Boeing and DOJ Finalize and File Plea Agreement Related to Fatal 737 MAX Crashes
By: MT Newswires | July 25, 2024
Boeing BA and the US Department of Justice have finalized a plea agreement related to two fatal 737 MAX crashes, and filed it in court Wednesday.
Under the proposed plea agreement, filed in the US District Court for the Northern District of Texas, Boeing agrees to plead guilty to conspiracy to defraud the US, pay a $243.6 million fine and to invest at least $455 million in its compliance, quality and safety programs.
The court is asked by both the DOJ and Boeing to determine 'whether and in what amount restitution is owed to the families, whom the Court previously determined were directly and proximately harmed by Boeing's conduct as charged.'
Boeing confirmed to MT Newswires Thursday the company and the DOJ filed the plea agreement, subject to court approval.
"We will continue to work transparently with our regulators as we take significant actions across Boeing to further strengthen our safety, quality and compliance programs," Boeing said.
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2 months ago
US DOJ Nears Completion of Boeing Plea Agreement, Filing Expected by July 24
By: MT Newswires | July 19, 2024
The US Justice Department has made significant progress in finalizing a plea agreement with Boeing BA, Reuters reported late Thursday, citing the agency.
The report said the DOJ plans to file a factual statement supporting its breach determination with the plea deal. Originally expected to be filed by Friday, the filing is now expected to be completed by July 24.
Boeing had agreed earlier in the month to plead guilty to a criminal fraud conspiracy charge and pay a $243.6 million fine after the Justice Department found it had violated a deferred prosecution agreement from 2021, Reuters reported.
Boeing has not immediately responded to MT Newswires' request for comment.
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2 months ago
Boeing (BA) Q2 Commercial Deliveries Plunge 32% Y/Y, Lag Airbus
By: Zacks Investment Research | July 12, 2024
The Boeing Company BA recently reported the delivery figures of its commercial and defense operations for the second quarter of 2024. It recorded a year-over-year decline of 32.4% and 26.3% in commercial and defense shipments, respectively.
Combining both segments, Boeing’s total deliveries in the second quarter were 120 units compared with 174 in the year-ago period. Such dismal delivery numbers might lead to a decline in BA’s second-quarter top line year over year.
Commercial Deliveries Drop
Boeing reported commercial deliveries of 92 airplanes in the second quarter of 2024, down from the prior-year level of 136, primarily due to lower 737 and 787 deliveries.
The shipments of 737 totaled 70 compared with 103 in the year-ago period. Nine 787 models were shipped compared with 20 in the corresponding period of 2023. Apart from these jets, Boeing delivered six 767 jets during the second quarter compared with eight in the year-earlier quarter.
Only 777 jet deliveries improved year over year from five to seven in the second quarter of 2024.
What Led to Lower Commercial Deliveries?
Boeing’s 737 jet program has been suffering since the beginning of this year. Notably, this jet maker had to slow down the production rate for the 737 aircraft model after it came under increased scrutiny from regulators following the mid-air blowout of a door plug on a 737 MAX 9 jet in January 2024.
This incident also led to subsequent inspections by airlines that revealed some serious quality control issues for some 737 Max 9 jets, making the delivery of these jets more difficult even after the Federal Aviation Administration cleared them to fly again.
Also, the delay in aircraft delivery that Boeing has been facing in China lately, due to a Chinese regulatory review of batteries powering the cockpit voice recorder, must have resulted in the southward trend in 737 deliveries.
Supplier shortages of a few key parts of 787 jets have been hindering the production rate for this aircraft model, which might have led to lower 787 delivery figures in the second quarter.
Boeing Vs. Airbus
A comparative analysis of Boeing’s archrival Airbus SE’s EADSY 2024 commercial aircraft shows that the latter was ahead in terms of delivery numbers. Notably, Airbus delivered 181 commercial aircraft in the second quarter compared with Boeing’s 136 in the same period.
The year-over-year change in deliveries also reflects a similar story. While deliveries for Boeing indicate a decline of 32.6%, the same for EADSY signals a drop of 4.2%.
Defense Deliveries Decline Too
Boeing reported defense deliveries of 28 airplanes in the second quarter of 2024, which decreased from the prior-year level of 38.
The shipments of AH-64 Apache (remanufactured) deliveries were seven compared with the year-ago period’s figure of 16. Three AH-64 Apache (new) were delivered compared with five in the corresponding period of 2023.
BA delivered one CH-47 Chinook (new) jet during the second quarter compared with two in the year-ago quarter.
The delivery of F/A-18 Models came in at three compared with six in the second quarter of 2023. Two P-8 Models were delivered, flat year over year.
However, the delivery of CH-47 Chinook (renewed) jets increased to four from three in the year ago quarter. The shipments of F-15 Models rose to six jets from four in the prior-year quarter. Also, Boeing delivered two KC-46 Tankers compared to none delivered in the second quarter of 2023.
Expectations From Peers
Prominent jet makers that are yet to report their delivery numbers are Textron TXT and Embraer S.A. ERJ.
In the last reported quarter, Embraer delivered 25 jets comprising seven commercial and 18 executive (11 light and seven midsize) jets. The backlog at the end of the first quarter of 2024 was $21.1 billion for Embraer.
The stock boasts an average four-quarter earnings surprise of 73.12%. The Zacks Consensus Estimate for ERJ’s 2024 sales implies an improvement of 20.1% from the prior-year reported figure. Shares of Embraer have risen 98% in the past year.
Textron delivered 36 jets in the last reported quarter, up from 35 in the year-ago quarter. It also delivered 20 commercial turboprops, down from 30 in the first quarter of 2023. The company delivered 18 commercial helicopters in the first quarter of 2024, down from 22 in the year-ago period. At the end of the first quarter of 2024, Textron recorded a backlog of $13.72 billion.
The long-term earnings growth rate for Textron is 10.1%. The Zacks Consensus Estimate for TXT’s 2024 earnings indicates growth of 5.7% from the prior-year reported figure. Textron’s shares have rallied 28% in the past year.
Price Performance
Shares of Boeing have lost 15.5% in the past six months compared with the industry’s decline of 7.5%.
Zacks
Zacks Rank
The company carries a Zacks Rank #4 (Sell) at present.
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3 months ago
Boeing rises; agrees to plead guilty to fraud in US 737 MAX probe
By: Reuters | July 8, 2024
** Shares of planemaker Boeing BA up 1% to $186.7 premarket
** BA agrees to plead guilty to criminal fraud conspiracy charge; to pay a fine of $243.6 mln to resolve a U.S. Justice Department investigation into two 737 MAX fatal crashes
** "This is such a long, drawn nightmare for shareholders and there's a ray of optimism that this may be the last of it - the last hurdle that Boeing needs to cross before it gets back," - Art Hogan, chief market strategist at B Riley Wealth
** The two crashes, in Oct 2018 and March 2019, killed 346 people and led to the FAA grounding the MAX fleet for 20 months, which cost Boeing $20 bln
** BA to also spend at least $455 mln over the next three years to boost safety and compliance programs
** Shares of airplane parts supplier Spirit AeroSystems SPR down 0.7%
** Through Friday's close, BA shares have fallen 48.9% since 2018 crash and 29.1% YTD
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