Because high-yielding business travelers are some of the most profitable customers for airlines, any lack of business travel resurgence may damp new aircraft demand. On the supply side, the major risk in the aftermath of the 737 MAX grounding and production rework on the 787 lies in global supply chain disruptions that affect Boeing’s engine and subsystem suppliers. The Boeing Co. (BA) is one of the world’s leading aerospace companies. It develops and manufactures commercial jets, military aircraft, weapons systems, and strategic defense and intelligence systems. The company also provides services to its commercial and defense customers, including supply chain and logistics management, engineering, maintenance, upgrades, pilot training systems, and data analytics.
That’s not quite as strong as the 100 orders per month Boeing was seeing in 2018, when airlines were going ga-ga over the 737 MAX. But that is on par with the sort of passenger jet purchases being made between the beginning of 2015 and westernfx review the end of 2017. Boeing’s 787 Dreamliner aircraft has suffered a series of manufacturing quality issues over the past year. The problems began in September 2020 when the FAA said it was looking into manufacturing flaws in the aircraft.
- Due to the ongoing pandemic-related restrictions in China, there are many supply chain disruptions.
- He also was CEO at Neilsen Holdings PLC (NLSN) and vice chairman of General Electric Co. (GE).
- As of Oct. 20, 2021 Boeing had 587,699,224 shares of common stock outstanding.
These delays resulted in escalating costs and abnormally low production rates for the 787 throughout Boeing’s third quarter, which ended Sept. 30, 2021. Boeing traces its origins to 1916 with the founding of Aero Products Co. by William E. Boeing, who had recently co-developed a single-engine, two-seat seaplane with Conrad Westervelt. Boeing Airplane spent a brief period in the airline business in the late 1920s and early 1930s, but new antitrust legislation in 1934 required the separation of airplane manufacturing from air transport. The company’s expansion into military aircraft and weapons systems began during World War II. Boeing went public through an initial public offering (IPO) on Jan. 2, 1962. Boeing has a large backlog that covers several years of production for the most popular aircraft, which gives us confidence in aggregate demand for aerospace products.
Company Report
David L. Calhoun is CEO and president of Boeing, positions he assumed in January 2020. He has been a member of the board of directors since 2009 and was chairman from October to December 2019. He has extensive executive, management, and operational experience. Prior to his current positions with Boeing, Calhoun served as senior managing director and head of portfolio management at The Blackstone Group since January 2014. He also was CEO at Neilsen Holdings PLC (NLSN) and vice chairman of General Electric Co. (GE). CNBC’s Jim Cramer on Monday analyzed the five stocks that performed the worst on Dow Jones Industrial Average during the first quarter.
Boeing is known for designing and manufacturing aircraft for commercial and military use. However, the company has been in the news more, lately, for losing investor confidence due to the massive loss that they reported for the third quarter of 2022. It’s not every day a company misses analyst estimates for revenue by $2 billion. Boeing’s 737 MAX was grounded by the Federal Aviation Administration (FAA) and other aviation authorities worldwide in March 2019.
We value Boeing’s stock at $220 per share, which represents 20 times our 2024 free cash flow and 2 times 2024 sales estimates. We really do think the enormous special charges and fleet groundings are behind Boeing, though we forecast a couple of years of hard slogging as it clears up supply chain issues that hamper production pacing. The coronavirus crisis shocked the aviation industry and essentially halved global revenue passenger kilometers in 2020. We expect the firm to return to 2018 levels of 737 MAX production by 2025.
Eight 787s were removed from service by airlines in response to the FAA’s investigation. We greet news of the management shakeup at Boeing with resigned exhaustion. Oscar Munoz, former United Airlines CEO and chairman, joins ‘Squawk Box’ to discuss news of United Airlines asking its pilots to take unpaid time off next month due to late-arriving aircraft from Boei… Alaska Airlines announced in a filing Thursday it received a $160 million cash payment from Boeing in compensation for lost revenues stemming from the January mid-flight door plug blowout incident, wh…
What does the future of Boeing look like?
A few years ago, China was responsible for 22% of Boeing’s aircraft revenue, the second- largest market behind the U.S. As for deliveries, the current pace of 28 per month is still below the more normalized clip of a little more than 60. Boeing can’t afford to start making a plane without reasonable assurance a buyer will take delivery, and make payment. Moreover, the pandemic itself has created a logistical nightmare for makers of complex machinery like passenger jets. It can take months for the assembly process to begin operating at full speed again.
What’s Happening with the 737 MAX?
Calhoun recently bet big on himself and his company, purchasing some $4 million worth of the stock himself. Regardless, 28 delivered jets per month is a marked improvement from 2020’s average in the teens. The interactive brokers forex review author or authors do not own shares in any securities mentioned in this article. With a focus on regaining prepandemic production levels for first-quarter results, here’s what we think of Boeing’s stock.
Company Profile
However, the company faces multiple lawsuits related to the accidents and is under investigation by the U.S. government, including the Securities and Exchange Commission (SEC). The grounding of the 737 MAX and the resulting halt in deliveries to customers has significantly affected Boeing’s financial strength, including its revenue and earnings. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation.
Even the smallest of disruptions, much less ones like a supply chain crisis or a pandemic, can wreak havoc on an aircraft company’s operation. Boeing got its start in 1910 when William E. Boeing developed a love for aircraft. Soon after he takes his first plane ride which leads him to build a hangar and begin construction of his first plane. The onset of WWI helped spur the company’s growth but business was cut drastically in its wake. The start of WWII was another milestone for the company and one that led to its current position of dominance. The company was incorporated in 1916 and is based in Chicago, Illinois.
The company is scheduled to release its next quarterly earnings announcement on Wednesday, April 24th 2024. MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. New Rank-Based ScoringMarketRank™ is calculated by averaging available category scores (with extra weight given to analysis and valuation), then ranking the company’s weighted average against that of other companies. We’re going to break down Boeing stock to see how the company is performing financially.
Overall, we expect operating margins to improve to about 13% at midcycle, versus 12% in 2018. We’re modeling steady single-digit growth and reasonably consistent margins within the defense business. We expect the services business will be able to regain profitability faster than Boeing as a whole because aftermarket revenue increases directly with flights. We think Boeing’s biggest risks are macro risks that limit quebex demand and operational risks that constrain supply, both of which it has weathered over the last three years. We think Boeing deserves a High Morningstar Uncertainty Rating, but we note the firm is still working through much higher supply risks than Airbus EADSY as it revives 737 MAX and 787 production and deliveries. On the demand side, the pandemic dramatically reduced air travel and aircraft deliveries.
