Boeing Losses Seen Shrinking As Top Engine Suppliers Back Hopes For Aviation Recovery

Industry

Boeing’s (BA) quarterly loss is expected to narrow when it reports first-quarter results early Wednesday as vaccination rates and travel pick up. Boeing stock edged higher Tuesday.

The report comes after top jet-engine makers General Electric (GE) and Raytheon Technologies (RTX) reported mixed results Tuesday. But GE backed expectations for an aviation recovery in the second half of 2021.
Boeing Earnings Report

Estimates: Analysts expect a loss of $1.17 per share vs. a $1.70 loss in the year-ago quarter. Revenue is seen falling 15% to $14.38 billion

Results: Check back before the market opens Wednesday.

Boeing previously reported that Q1 commercial aircraft deliveries jumped 54% to 77, including 63 737s. But a 737 Max electrical wiring issue was disclosed on April 7, and affected carriers have temporarily grounded the jets.

The earnings report comes after CEO David Calhoun said last week that the company doesn’t plan to bring back the Boeing stock dividend in the near term, adding that cash flow should turn positive again in the near- to medium-term future.

The board of directors also extended the standard retirement age to 70 from 65 for its CEO. Calhoun, 64, has served as president and CEO since Jan. 13, 2020.

Stock: Shares rose 0.4% to 242.47 in Tuesday’s stock market trading. Boeing stock recently made a round-trip triggering a sell signal, but is gaining support near the 50-day line, and a possible double bottom is forming.

Top Boeing supplier Spirit AeroSystems (SPR) dipped 0.4% Tuesday, GE lost 0.6%, and Raytheon gained 2.2%.

Boeing Stock Headwinds Easing

Boeing has already flashed some positive signs ahead of earnings. On Sunday, a top European Union official said U.S. tourists who have been vaccinated against the coronavirus can visit this summer, lifting Boeing stock and other aviation stocks.

Earlier, U.S. health officials said fully vaccinated people can travel within the U.S., and the Transportation Security Administration has seen over 1 million travelers come through its checkpoints daily since mid-March.

With vaccination rates rising and the Boeing 737 Max returning to service, airlines have resumed aircraft orders. February was the first month in more than a year that orders topped cancellations, and the momentum continued into March.

But Boeing is still coming out of a deep hole: 737 Max orders shrank by over 1,040 in 2020 as nearly 600 have been removed from the backlog and nearly 450 have been canceled by carriers.

However, Boeing’s defense business is also seeing some tailwinds. The Australian Navy and Air Force ordered 11 more P-8 maritime surveillance aircraft on April 1, and the U.S. Air Force awarded Boeing a $2.1 billion contract on Jan. 20 for 15 more KC-46 tankers.

Still, the KC-46 program has been a drag on Boeing earnings as it has cost over $5 billion in charges so far, including a $275 million charge in Q4 due to “production inefficiencies including impacts of Covid-19 disruption.”

 

Source: Civil Aviation Authority – Qatar