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8 hours ago
Boeing Faces Options Barrage After Another Fatal Accident
By: Schaeffer's Investment Research | December 30, 2024
• Boeing's 737-800 is at the center of a deadly crash in South Korea
• BA puts are popular today, but calls have usually ruled the roost
Shares of embattled aerospace firm Boeing Co (NYSE:BAS) are 4.2% lower at $173.23 at last glance, a day after a fatal crash in South Korea involving the company's 737-800 aircraft. The passenger plane was operated by Jeju Air and killed 179 of 181 people on board.
This marks another deadly mishap in a long saga of disasters for Boeing. With today and tomorrow left in 2024, BA is down 34% year to date, the worst-performing Dow stock of the year. On the charts, the $170 level and 200-day moving average are containing today's pullback.
Boeing stock's options pits are brimming with bearish activity. Already, 45,000 puts have crossed the tape, which is seven times the intraday amount. Most popular are the weekly 1/3 170- and 165-strike puts, with new positions being sold to open at both contracts.
Calls have been more popular recently, per BA's Schaeffer's put/call open interest ratio (SOIR) of 0.60 that ranks in the 6th percentile of annual reading. Echoing this, the security's 10-day call/put volume ratio of 2.52 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands above 96% of readings from the past 12 months.
It's worth noting that BA's elevated Schaeffer's Volatility Scorecard (SVS) of 71 out of 100 implies a tendency to outperform volatility expectations -- a boon for premium players.
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2 weeks ago
Boeing stock rises following Pegasus Airlines' large order
By: Investing | December 19, 2024
Shares of The Boeing Company (NYSE:BA) climbed 3% today after Pegasus Airlines, Turkey's premier low-cost carrier, announced a significant order for Boeing's 737 MAX aircraft.
The deal includes a firm order for 100 of the 737 MAX 10 models, with options for an additional 100 planes. This order surpasses the size of Pegasus's existing fleet and signals confidence in Boeing's 737 MAX series.
The order is particularly noteworthy as it exceeds the current Pegasus fleet, which consists of 46 A320-200neos, 41 A321-200neos, 7 A320-200ceos, and 16 737-800s. The initial deliveries of the new aircraft are scheduled for 2028, aligning with Boeing's latest guidance for MAX 10 certification, expected in late 2025 to early 2026.
Jefferies analyst Sheila Kahyaoglu commented on the broader implications for Boeing's delivery schedule, stating, "We assume 45 MAX deliveries in Q4 (which could be a stretch, given a big Q4 ramp and 12 delivered in Oct/Nov) with 270 for 2024 and 384 in 2025 (assumes 29/mo production vs. 32/mo deliveries)."
This substantial order from Pegasus Airlines could reflect growing market confidence in the 737 MAX after its previous grounding and safety concerns.
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2 weeks ago
Boeing Resumes Production as the Airline Industry Prepares for a Record-Breaking 2025
By: U.S. Global Investors | December 16, 2024
The clouds hanging over Boeing’s operations finally appear to be clearing.
After a turbulent period of setbacks—including crashes, a global pandemic, supply chain snarls and a recent labor strike—Boeing has officially restarted production of the 737 MAX. And while the ramp-up will be gradual, the significance of this for the aviation industry can’t be overstated.
Why? Because the global fleet of commercial airliners has never been older, and carriers are under pressure to modernize.
That should be music to Boeing shareholders’ ears, but it’s also a positive indicator for the entire industry, which looks poised for a record-shattering 2025. With passenger numbers expected to hit record highs and airlines lifting their guidance, the tailwinds are undeniable.
An Aging Fleet Amid Soaring Demand
According to the International Air Transport Association (IATA), the average age of the global fleet of commercial aircraft now stands at 14.8 years—the highest on record. Compare that to the average long-term age of 13.6 years, and it’s clear that airlines are flying older planes for longer periods. These aging aircraft require more maintenance, more fuel and more repairs, all of which weigh on airlines’ bottom lines.
The silver lining? This presents a massive opportunity for new aircraft deliveries, and Boeing’s production restart couldn’t come at a better time. The IATA estimates that 1,254 new planes will be delivered this year, potentially followed by 1,802 deliveries in 2025. That would be just shy of the record 1,813 aircraft that were delivered in 2018.
Boeing’s Bumpy Road to Recovery
Boeing’s journey back to full production has had its challenges. The recent strike by workers halted operations for more than 12 weeks, adding to the planemaker’s headaches. According to Reuters, U.S. regulators capped Boeing’s production at 38 jets per month following the midair blowout incident on an Alaska Air flight earlier this year.
But Boeing is resilient. With production resuming, analysts at Jefferies predict the company will average 29 737 MAX deliveries per month in 2025. That’s still below Boeing’s target of 56 per month, but it represents solid progress for the manufacturer.
Airline executives are taking notice. Alaska Air CEO Ben Minicucci recently acknowledged that while Boeing’s comeback is still a work-in-progress, he’s seeing “an improving trend” under the company’s new leadership.
A Billion-Dollar Vote of Confidence
Airlines themselves are brimming with optimism. Alaska, fresh off its acquisition of Hawaiian Airlines, recently announced a $1 billion share buyback program and issued strong financial guidance. The Seattle-based airline—one of the top performers of 2024, gaining 64% year-to-date—expects to post full-year adjusted earnings of at least $5.75 per share in 2025, exceeding Wall Street’s estimates.
Other major carriers are singing a similarly bullish tune. American Airlines raised its profit expectations for the final months of 2024, thanks to robust holiday demand, higher fares and lower fuel costs.
Southwest Airlines also lifted its revenue outlook, citing resilient travel demand and changes to its revenue management practices.
Record Revenues on the Horizon?
Looking ahead to 2025, the IATA projects total industry revenues to top $1 trillion for the first time in aviation history. Passenger numbers are expected to soar to 5.2 billion, a 6.7% increase from 2024 and another all-time high.
A recent Bloomberg Intelligence survey found that 36% of U.S. travelers plan to take vacations in 2025, up from 28% the previous year. High-income households are leading the charge, with 65% of those earning over $150,000 prioritizing vacations. This is a critical demographic for airlines, as premium travelers generate a disproportionate share of profits.
Wheel’s Up!
Boeing’s production restart is a signal that the industry’s supply-side challenges are being addressed.
Meanwhile, surging demand and record-breaking projections for 2025 suggest that airlines are on the cusp of a new era of profitability.
For investors, travelers and industry stakeholders, we believe the outlook is undeniably bright. The sky’s the limit!
* * *
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3 weeks ago
Internal Voices Call For Boeing Breakup To Boost Stock By 100%
By: Forbes | December 8, 2024
Once hailed as the height of American aerospace invention and engineering, Boeing now faces several growing difficulties that have aroused shareholder uncertainty and jeopardized its financial viability. The decline of the stock has been brutal. Disputes, manufacturing delays, and eroding market trust have eclipsed the company's heritage over decades of greatness. Unexpectedly, even Boeing's own employees, who form the core of its operations, have begun to support a radical and transformative action: a full Boeing breakup. This internal desire for change shows a growing awareness among companies that their present structure is not efficiently serving their stakeholders. Analysts estimate that this kind of action could potentially double Boeing's stock value. The concept of separation is no longer only a strategic choice; it's becoming necessary for the company's future.
The Call From Within For A Boeing Breakup
In a significant and unexpected development, senior managers at Boeing have expressed their support for dismantling the conglomerate and a full breakup of the company. After Boeing's workforce sent a letter directly to The Edge, expressing their agreement with the firm's recommendation for a corporate breakup, this shift gained momentum. This internal push highlights a profound acknowledgment from those closest to the company’s operations: Boeing’s current structure not only impedes operational efficiency but also hinders its ability to achieve optimal market performance. The alignment of internal voices with external analysis underscores the urgency for transformative change.
Boeing’s Stock Price Decline
Deeply ingrained and growing over time are Boeing's problems. Tragically claiming 349 lives, the 737 MAX catastrophes revealed serious flaws in corporate governance and fundamental safety shortcomings. These events started a chain reaction of problems, including ongoing manufacturing delays, repeated quality control failures, and growing financial losses. Combined, they have seriously tarnished Boeing's once-starry reputation. Investor confidence has dropped; the company's shares have fallen 43% year-to-date, a clear indication of the market's mounting concern on Boeing's capacity to recover.
Boeingf Vs S&PBarchart
The Case For A Boeing Breakup
Separating Boeing into four separate divisions—commercial airplanes, defense, space and security, and global services—could release significant revenue. This approach would let every division concentrate on its main strengths, simplify processes, and improve responsibility. This kind of action reflects General Electric's recent separation, meant to simplify its corporate strategy and increase shareholder value.
Boeing Has A 100% Upside On A Breakup
The Edge Consulting Group, who have advised on breakups for the last 20 years, sees a 100% increase in the stock price from the sum of the parts if Boeing were to break up in the manner suggested. This projection is based on the potential for each standalone unit to achieve higher operational efficiency and profitability, thereby attracting more focused investment.
Employee Sentiment: A Catalyst For Change
The growing demand for a split within Boeing's own ranks is a significant trend. Staff members, who actively participate in the organization's daily operations, are making a strong case for a structural redesign. This is more than just discontent; it's an acknowledgment of fundamental inefficiencies compromising Boeing's capacity for global competitiveness and efficient operation.
Senior leadership and ground crew of Boeing have a detailed awareness of the operational difficulties that outsiders sometimes overlook. Their support of a split highlights a harsh reality: the company's present monolithic structure hinders efficiency, creativity, and finally expansion. These workers have seen personally the knock-on impacts of bureaucratic bottlenecks, quality control problems, and manufacturing delays resulting from a large, clumsy company.
This is an urgent call to action for management, not only a warning. Long-term Boeing performance depends on rebuilding confidence and morale among the employees. Ignoring this internal agreement runs the danger of alienating the very people by keeping the business going. It also runs the danger of widening the gulf between management and the workers vital to Boeing's recovery.
The employees' support of a separation is about a vision for a more nimble, targeted, and responsive Boeing, not only about frustration. They are pushing for a system whereby every division—commercial aviation, defense, services—may function free from the complexity of the bigger body. This is, they think, the secret to releasing the actual potential of the business.
Management must pay attention to this realization and welcome the chance for reorganizing. By doing this, Boeing not only answers staff worries but also sets itself to flourish in a market that is growingly competitive. A separation may revitalize the business, rebuild its reputation, improve operational effectiveness, and maybe release the 100% upside that several analysts, including The Edge, have indicated.
Rare and potent is this moment of employee-driven lobbying. Boeing's leadership has a chance to coincide with the individuals most familiar with the business and guide it toward a rich, sustainable future. Ignoring this threatens not only the business's legacy but also its survival.
A Boeing Breakup Is A Strategic Imperative
The company finds itself at a crucial juncture. A Boeing breakup isn’t just a strategic option—it’s a proven path to revitalization. Intel’s recent struggles highlight what happens when a company clings to outdated structures, hampering its ability to innovate and meet market demands. In contrast, General Electric’s successful breakup demonstrates the power of streamlined focus, operational efficiency, and unlocking trapped shareholder value.
By embracing this transformation, Boeing can follow GE's lead, shedding the inefficiencies that have eroded its legacy and restoring confidence among investors and employees alike. This move would allow its divisions—commercial aviation, defense, and services—to thrive independently, each aligned with market demands and primed for growth. Analysts project a 100% upside if Boeing takes this decisive step, and its own workforce is calling for it.
The choice is clear: adapt and unlock Boeing’s true potential, or risk following Intel's path of stagnation and decline. Over decades, Boeing's employees have created a legacy that is evidence of creativity, commitment, and American aerospace greatness. These are the men and women who built airplanes capable of revolutionizing the planet, backed national defense, and carried mankind upward. Their diligence and unrelenting search of innovation produced a brand that stood for advancement, safety, and trust. But that heritage is now on the brink, taxed by business mistakes, manufacturing delays, safety lapses, and a loss of strategic clarity.
The significance of this heritage cannot be overlooked due to inertia or uncertainty. Boeing's current structure has become too burdensome; it restricts efficiency, stifles creativity, and irritates the very individuals who sustain the business. Those who know the company's shortcomings and its unrealized potential better than anybody else are calling for reform from within.
This isn’t just a business decision; it’s a fight to preserve Boeing’s soul, its workforce, and its standing as a leader in aerospace. The opportunity is diminishing, and delaying is no longer an option.
Boeing must act now. A Boeing breakup needs to happen. The company’s future depends on it.
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1 month ago
Bear of the Day: Boeing
By: Zacks Investment Research | November 27, 2024
When it comes to aerospace, Boeing (BA) is the name on everyone’s lips. But recently, this industry titan has found itself struggling to get its wings back. Let’s cut through the buzz and dive into why Boeing might not be the high-flyer it once was, and why I’m naming it today’s Bear of the Day.
Boeing is a leading American multinational corporation in the aerospace and defense sectors. The company designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and missiles worldwide, and provides leasing and product support services.
It seems like every time Boeing starts to pick up altitude, it gets hit with more turbulence. The aerospace giant has been dogged by supply chain disruptions, causing delays in production. And it’s not just about the materials—skilled labor shortages continue to plague the industry, leaving Boeing struggling to meet delivery timelines.
In the post-COVID world, supply chain issues have become a tired excuse, but investors demand results. Boeing’s inability to iron out these problems raises questions about management’s effectiveness in navigating a tricky macroeconomic environment.
Over-promise and under-deliver has become the mantra at Boeing recently. A quick look at the Price, Consensus and Surprise Chart outlines this. Earnings estimates seem to start sky high every year then spend the rest of the year being walked back.
That’s a big reason why the stock is currently a Zacks Rank #5 (Strong Sell). Over the last sixty days, no fewer than eight analysts on Wall Street have cut their earnings estimates for the company. The negative moves have dropped our Zacks Consensus Estimate for the current year from a loss of $4.23 to a loss of $16.20. Next year’s number has been cut from a profit of $3.32 to a meager 6-cents.
Image Source: Zacks Investment Research
A feather in the bull’s cap here, revenue growth is forecast to return in grand fashion next year. After contracting 10.5% for FY24, Wall Street is now expecting 23% growth next year to $85.9 billion.
The Aerospace – Defense industry is currently in the Bottom 46% of our Zacks Industry Rank. There are a handful of names in the industry which are in the good graces of our Zacks Rank. These include Zacks Rank #1 (Strong Buy) Leidos (LDOS) as well as Intuitive Machines (LUNR).
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1 month ago
Is Boeing Stock a Buy? 5 Pros and 1 Big Risk to Watch in 2024
By: Market Beat | November 18, 2024
The Boeing Company BA has had a tumultuous 2024 mired by regulatory issues, negative publicity, lay-offs, rising debt, stock dilution, and mounting losses capped off by a 33,000 worker machinists’ union strike.
The aerospace sector giant has seen its stock lose 46.2% year-to-date (YTD), hitting levels not seen in over two years. Many investors may believe Boeing’s incumbent position as an American monopoly and global duopoly for commercial airplane manufacturing makes it a viable long-term hold despite the short-term pain.
The incoming Trump administration’s core “Made in America” theme drives its initiative to bolster American supply chains in the name of national security. Many believe that Boeing is too vital to America to go under.
Let's take a look at five reasons to buy Boeing stock—and one reason to avoid it altogether.
1. The Union Strike Is Finally Over; Production Can Resume
The Boeing machinists’ strike started on Sept. 13, 2024 when over 33,000 workers walked off the job at the Everett and Renton plants in Seattle. This put an immediate production halt to its Boeing 737, 777, and 767 airplanes, pushing the company's losses to more than $6 billion in its third quarter of 2024. Analysts believe Boeing lost around $5.5 billion in earnings due to the strike.
The resulting cash crunch prompted Boeing to raise over $20 billion in a stock offering to improve its liquidity position and fend off potential downgrades from ratings agencies. This move, however, resulted in shareholder dilution. The company is also laying off 10% of its 177,000-person workforce in a restructuring effort to trim costs.
On Nov. 4, 2024, Boeing reached a settlement with the machinists for a 38% pay raise over four years, a $12,000 ratification bonus, and improved 401k benefits. With nearly 59% of the strikers voting to approve the new contract, the strike officially ended, and production is set to resume in a few weeks.
2. Boeing Has Over $500 Billion of Backlog
While Boeing is often referred to as part of a global duopoly with Airbus SE EADSF, U.S. airlines tend to favor Boeing due to its strong domestic presence and longstanding relationships. However, American Airlines Group Inc.
AAL
continues to place significant orders with Airbus, such as the A321neo.
Boeing holds a dominant position in the U.S. market for commercial aircraft. The post-pandemic travel boom has driven all the major airlines to upgrade their fleets, which means more airplane orders for Boeing. Actually, more than they can handle.
The company is currently managing substantial order backlogs for several major airlines:
• United Airlines Holdings Inc. UAL is waiting on 497 airplanes and has cut its 2024 deliveries by 102 fewer planes.
• Southwest Airlines Co. LUV, which exclusively only flies Boeing 737 planes, is still waiting on the delivery of 432 Boeing 737 Max airplanes.
• Emirates is waiting for 240 planes.
• Delta Air Lines Inc. DAL is willing to wait until 2026 and even 2027 for its first 737 MAX 10 airplane, which they ordered 100 of and were expected to be delivered over four years starting in 2025.
As of the end of September, Boeing had a backlog of 6,197 airplanes, costing just over half a trillion dollars. Unlike many businesses in this uncertain macroeconomic climate, Boeing certainly has no demand problem. It has more business than it can handle. The problem is execution and capacity, definitely not demand.
3. The Big Contract Deals Still Keep Rolling In
On Oct. 1, 2024, Boeing won $8.46 billion of multiple U.S. Department of Defense contracts for the Navy and Air Force. Boeing’s total U.S. defense contracts rose to $34 billion in October 2024, up 40% year-over-year, despite the machinist strikes.
On Nov. 7, 2024, Israel’s Defense Ministry announced a $5.2 billion deal to purchase at least 25 Israeli F-15 fighter jets out of Boeing’s St. Louis facilities.
4. End-of-Year Tax Loss Harvesting is Magnifying the Selling
Every year, tax loss and tax loss harvesting selling takes place from November through December. This involves selling stocks that are underperforming or down for the year to realize capital losses to offset capital gains in your portfolio. While this is commonplace with individual investors, it's the mutual funds and hedge funds that can make a dramatic impact on share prices.
With Boeing stock falling 46.2% YTD compared to the 23.2% gain in the S&P 500 index, there's no doubt funds are divesting Boeing stock. Tax loss selling magnifies the losses. However, the silver lining is that these stocks tend to rally back in January as funds re-enter their positions after the 30-day wash rule. For bullish investors, it pays to buy into the selling for a bounce in January.
5. BA Stock Is Nearing a Powerful Weekly Double-Bottom Support Level
A double bottom is a significant price level where a stock finds a floor and bounces. The bounce eventually exhausts as the stock falls back to the prior bottom to put in another bottom near or at the same level before it stages a higher rally. A double bottom that gets retested and bounces again forms a triple bottom. The wider the time frame chart, the more significant the double bottom levels become.
BA formed a double bottom around the $121 level in May and then October of 2022. While BA stick technically fell as low as $113.00 in June, it’s important to note that the candlestick body remained at or above the $121.00 level every time it fell below. After the second bottom formed sharply at $121.00, BA staged a massive rally to a peak of $267.54 by December 2023.
However, that was the highest peak and the head of a bearish head and shoulders pattern as each bounce peaked at a lower high. The right shoulder peaked at the weekly anchored VWAP at $196.95, literally on the nose, in July 2024. BA stock has accelerated its selling to continue to drive the neckline sharply lower. The weekly RSI has plunged to the oversold 30-band. Fibonacci (Fib) pullback support levels are at the $131.43, $121.00 double bottom, $93.90 and $89.00 pandemic low.
BA’s average consensus price target is $190.37, and its highest analyst price target sits at $250.00. It has 14 analyst Buy ratings, 9 Holds, and 2 Sell Ratings. The stock has a 3.06% short interest.
Bullish investors can consider using cash-secured puts to buy BA at the Fib pullback support levels or consider buying LEAPS at Fib extension levels to capture the upside without deploying the full capital of owning the stock. If the LEAPS are or become deep in the money (ITM), then selling front-month out-of-the-money calls activates a Poor Man’s Covered Call strategy to generate income.
The 1 Reason to Avoid Boeing Stock: Trump Tariffs Could Cripple Boeing’s Margins and Ignite a Trade War
Boeing imports nearly 30% of the parts for its airplanes from international suppliers, which adds up to a lot of parts. Boeing 787, for example, has 2.3 million parts. Boeing even has a factory in China that finalizes painting and interior work before planes are delivered to Chinese airline customers.
During his previous term, President Trump imposed tariffs on various imports, including a 25% tariff on steel and a 10% tariff on aluminum from multiple countries, including the European Union. These measures increased production costs for U.S. manufacturers, including aerospace companies like Boeing, which rely on these materials for aircraft construction.
During his 2024 re-election campaign, Trump proposed a blanket 10% to 20% tariff on all imports and a 60% to 100% tariff on products imported from China. The actual actions are a wait-and-see situation.
The imposition of tariffs led to retaliatory actions from affected countries, resulting in reduced demand for U.S. exports. For instance, Boeing experienced a decline in aircraft deliveries to China, a significant market for the company, following the previous escalation of trade tensions. In 2018, 24% of Boeing's plane deliveries were to China, but from 2019 until December 2023, the company did not make any deliveries to the country.
Analysts have expressed concerns that a renewed trade war with China could be a punishing setback for Boeing, as the company has been eager to resume sales in one of the most lucrative airliner markets in the world.
The reintroduction of tariffs could lead to increased production costs for Boeing due to higher prices for imported materials and potential retaliatory tariffs from other countries. These factors could adversely affect Boeing's competitiveness in the global aerospace market and its financial performance.
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1 month ago
Urgent Action Required: Boeing's Future is at Stake - A Open Letter To Kelly Ortberg, CEO, Boeing
By: Barchart | November 17, 2024
Dear Mr. Ortberg.
Re: Time to Fix Boeing Before It’s Too Late
Once the glory of American invention and a worldwide leader in aerospace, the Boeing Company is today at a turning moment. Being a long-term value generator and supporter of shareholder interests drives me to draw attention to the systematic mistakes endangering Boeing's future. Your leadership finds one at a crossroads: either risk supervising Boeing's ongoing slide into mediocrity or act decisively to restore its legacy.
A Legacy at Risk
Boeing's problems are self-inflicted; they have nothing to do with outside pressure or state of the market. Mismanagement, a lack of strategic vision, and giving short-term gains top priority over long-term development have destroyed public confidence and shareholder value.
• The 737 MAX Debacle:
This crisis was not simply a product failure but a breakdown in leadership, culture, and accountability. The prioritization of cost-cutting over safety has caused irreversible reputational harm, exposing systemic flaws in Boeing’s engineering ethos - a cornerstone of its success.
• A Dysfunctional Portfolio:
The commercial airplanes and defense divisions, once vital assets, have become persistent liabilities. Operational inefficiencies and unprofitability weigh heavily on the entire organization. In contrast, the services division—an example of what Boeing could be—remains shackled to the dysfunction of the broader business.
• Stagnation in Innovation:
While competitors like Airbus are pushing boundaries, Boeing appears content with the status quo. This complacency is unacceptable for a company with its resources, history, and potential to lead the aerospace industry.
Breaking Up Boeing: A Bold Yet Pragmatic Solution
The time has arrived to separate Boeing into three independent companies: Defense, Commercial Airplanes, and Services. This is a sensible idea based on the possibility to release value and propel operational excellence, not a radical one.
• Focus and Accountability:
Each business would be laser-focused on its core strengths, free to innovate and compete on its own terms. For instance, the services division could thrive without subsidizing underperforming segments.
• Operational Efficiency:
A breakup would streamline decision-making, eliminate unnecessary bureaucracy, and enable leaner, more agile operations.
• Unlocking Shareholder Value:
As separate companies, Boeing’s divisions could be valued more accurately by the market. Wall Street rewards focus, and in its current state, Boeing lacks the clarity investors seek.
• Proven Playbook:
General Electric’s successful breakup serves as a blueprint. GE Aerospace’s post-split success demonstrates that separating complex businesses can revitalize operations and create immense shareholder value.
A Call to Action
Boeing cannot afford further delays or half-measures. By failing to act boldly, the leadership risks failing its shareholders, employees, and the aerospace industry.
We have conducted an in-depth analysis of a potential breakup, evaluating the operational and financial benefits. I would be happy to share our findings with you or your advisors for further discussion. This is not just an idea—it is a well-considered and actionable path forward.
I urge you to:
• Convene the board to explore a strategic breakup.
• Commit to a clear timeline for evaluating and executing the separation.
• Communicate transparently with shareholders and employees about the rationale and benefits of this decision.
Internal & External Threats
Boeing’s decline is not just a corporate failure; it is a national concern. The United States cannot afford a weak Boeing, and neither can the global aerospace industry. Competitors like Airbus are already capitalizing on Boeing’s vulnerabilities.
The growing aerospace aspirations of China exacerbate Boeing's inner conflict. Directly targeting Boeing in the single-aisle and widebody sectors, the Commercial Aircraft Corporation of China (COMAC) is fast progressing its C919 and C929 aircraft. Boeing runs the danger of losing more market share in one of the fastest-growing aviation sectors as Air China already committed as the launch client of the C929.
Airbus keeps growing its presence in China with improved production capacity in Tianjin, therefore surpassing Boeing in both market penetration and inventiveness. This twin threat from Airbus and COMAC emphasizes how urgently Boeing needs to move strategically and forcefully to preserve its position. Without transformative action, Boeing’s market share, reputation, and legacy will erode further.
You can not only fix Boeing but restore its standing as a global leader in aerospace. The question is: will you seize it?
Sincerely,
Jim Osman
CEO & Founder
The Edge Consulting Group
A Committed Shareholder and Advocate for Long-Term Value
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2 months ago
Boeing's stock reverses lower after announcing a $19 billion capital raise
By: MarketWatch | October 28, 2024
The capital raise, which was more than expected, included a $14 billion public offering of common shares. Bondholders cheered the news.
Shares of Boeing Co. briefly bounced, then reversed back lower in early Monday trading, after the troubled aerospace giant announced a larger-than-expected $19 billion capital raise, through public offerings of common stock and depositary shares.
Included in the offerings are 90 million shares of common stock, which based on Friday's closing price of $155.01 would be valued at $13.95 billion.
The company is also offering $5 billion of depositary shares, each representing one-twentieth of a share in newly issued convertible preferred stock.
The stock (BA) initially bounced to be up as much as 1% after the capital raise was announced, then reversed back into the red, to slump 1.7% in recent premarket trading.
Before the announcement, Bloomberg reported Boeing was set to launch a capital raise of more than $15 billion as soon as Monday.
The company filed a shelf registration to issue up to $25 billion of securities earlier this month and was widely expected to tap capital markets sooner, rather than later.
The capital raise comes as Boeing has warned of larger-than-expected quarterly losses and layoffs as a labor strike has entered its second month, and concerns that a high debt load could lead to a downgrade of the company's credit rating to "junk" status.
All three ratings agencies currently have the credit at the lowest rung of investment grade, although executives have said they are committed to retaining investment-grade status. The company has more than $57 billion of outstanding debt. A cut to junk would raise interest costs and also cut the company off from a larger pool of investors, who are only permitted to own investment-grade paper.
On Friday, the Wall Street Journal reported that Boeing was considering selling its space business as another way to deal with its operational issues and to raise money.
Read: Boeing's CEO wants to make it 'great again.' Here's what's standing in the way.
The strike by its machinists has come at an inopportune time for Boeing, which is struggling to turn itself around after a series of production missteps. The company became the focus of multiple federal investigations after a door panel blew off a 737 MAX plane during an Alaska Airlines flight in January.
Last week, the company posted a $6 billion loss for the third quarter and said it had burned through another $2 billion of cash.
"It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again," newly installed Chief Executive Kelly Ortberg said in prepared remarks.
Read more: Boeing reveals $6 billion quarterly loss ahead of key vote by striking machinists
It was Ortberg's first quarterly earnings report since taking the helm in August. The executive is the former head of Boeing's supplier Rockwell Collins, and oversaw that company's integration with the former United Technologies and RTX (RTX) until he retired in 2021.
Striking workers rejected the company's latest offer the day it reported earnings, extending the strike into a sixth week, as the Associated Press reported.
The offer rejected included pay raises of 35% over four years. The version that union members rejected when they voted to strike last month featured a 25% increase over four years.
The union, which initially demanded 40% pay boosts over three years, said the annual raises in the revised offer would total 39.8%, when compounded. Boeing has said that average annual pay for machinists is currently $75,608.
Boeing workers told Associated Press reporters that a sticking point was the company's refusal to restore a traditional pension plan that was frozen a decade ago.
Boeing said Monday it will also offer the underwriters of the offerings options to buy an additional 13.5 million common shares and $750 million of depositary shares to cover over-allotments. That could bring in an additional $2.84 billion for Boeing.
Boeing said it plans to use the proceeds from the offerings for general corporate purposes, which could include repayment of debt, working capital, capital expenditures and funding of its subsidiaries.
Bondholders appeared to welcome the news, and the inclusion in the use of proceeds of plans to repay debt. Spreads on the company's outstanding bonds were tighter by a few basis points, as the following charts from data solutions provider BondCliQ Inc. show. The green line highlights the spread movement on Monday.
There was net buying of the bonds early in the session.
The stock has tumbled 40.5% year to date through Friday while the S&P 500 index has gained 21.8%.
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2 months ago
Has Boeing’s Stock Priced In All The Bad News? Investors Take Note
By: Forbes | October 24, 2024
From the 737 MAX disaster to supply chain problems and increasing financial difficulties, Boeing has had an ideal storm of setbacks. For investors, however, the essential question is: has the stock already factored in all the negative news? Having been in markets for a long time, I have seen businesses go to rock bottom only to show a robust comeback, exceeding expectations.
The present problems of Boeing are not unlike those of Ford and General Motors during the financial crisis, when both companies were about to fail. While GM came out of bankruptcy with strategic leadership changes and government help, Ford turned around by concentrating on fuel-efficient automobiles and reorganizing its activities. For Boeing, the parallels are obvious: operational realignment, changing leadership, and a fresh emphasis on safety and efficiency might form the basis for a comparable comeback, therefore offering investors hope for a long-term rebirth.
The 737 MAX Crisis: Has The Worst Passed?
The 737 MAX grounding by Boeing was catastrophic, causing government investigations, financial losses, and major damage to reputation. But the worst could now be behind us after years of addressing safety issues and rebuilding confidence. Having lived through crises of this kind, I have seen businesses bounce back. Boeing has turned toward recovery. Investors should now wonder whether the market has completely priced in these troubles, therefore indicating a possible dramatic turnaround.
Boeing is improving its quality control and safety. By including machine learning to aggressively find safety hazards, it has strengthened its Safety Management System (SMS). Based on AS9100 criteria, Boeing has also revised over 250 Quality Management System (QMS) policies; meanwhile, since 2019, quality checks have risen by 20%. The corporation invested in labor training and has taken significant steps to improve its safety and quality management systems Boeing also has had leadership changes to give safety and quality enhancement top priority and is closely working with Spirit AeroSystems.
Apart from the 737 disaster, Boeing has been battling supply chain problems, labor conflicts, and manufacturing delays. The performance of the stock has suffered hugely from continuous delays with the 777X aircraft and labor strikes. As a seasoned investor, though, these operational difficulties are well known in the market and essentially discounted in Boeing's value. The company keeps improving in terms of labor problems and manufacturing streamlining, implying that the present disturbances could not pose as much risk for long-term investors as first thought.
Further, Boeing's financial difficulties have been a main result of stretched cash flow and higher debt. Recent indicators of an improved cash position and short-term liquidity management, however, point to Boeing's possible better posture than it was at crisis height. From an investment standpoint, although Boeing's financial situation is still precarious, these developments suggest that some of the harshest headwinds could already be priced into the company, offering possible recovery when financial stability improves.
Financial Struggles: Headwinds But Room For Optimism
Continuous operational inefficiencies and significant debt building have been causing Boeing great financial strain. Cash flow has suffered greatly as a result, although new data show a better financial situation with better cash cushion and more liquidity management. These indicators of stabilization imply that the most severe financial headwinds may now be behind the organization, even if its financial situation remains difficult.
The Q3 2024 figures from Boeing point to resiliency and indications of recovery. Global Services saw income increase 2% to $4.9 billion thanks to increased commercial traffic and a healthy operating margin of 17%. Among the $8 billion in orders Boeing Defense received were a noteworthy $2.6 billion contract with the U.S. Air Force. The business also noted a sizable $511 billion backlog, indicating strong demand. Boeing's liquidity is still good with cash of $10.5 billion and recently acquired credit facilities. Moreover, the delivery of 92 737 model units shows development in its commercial section.
Cultural Transformation And Investor Confidence
Under its new leadership, Boeing is significantly changing its culture as part of its comeback. After years of giving fast development priority over safety and openness, Boeing is now turning its attention to values that foster confidence with regulators and consumers. Stabilizing long-term performance and raising internal morale depend on this shift. Since companies with strong internal values typically outperform those with divided corporate cultures and disconnected leadership, investors should view this cultural transformation as a potential catalyst for future recovery.
Although investor confidence in Boeing has suffered greatly over recent years, there is a chance for sentiment change because much of the negative news may be baked into the stock. Long-term investors may discover great value in Boeing at its present price levels as it keeps stabilizing its operations and rebuilding its reputation. Usually, investor mood lags operational recovery; so, constant improvement in leadership, openness, and execution helps to progressively restore market trust. Early indicators of a turn-around could be looking for good analyst changes or insider buying.
Is Now the Time to Buy Boeing Stock?
Although Boeing’s path has been uneven, there are encouraging indications that the worst of its difficulties might have passed by. Long-term investors may find an opportunity for upside even if most of the unfavorable news could be considered as influencing the stock price. Should Boeing keep enhancing its operations, carry out its cultural transformation with success, and strengthen its financial situation, the stock may show significant expansion possibilities. Boeing's present value is a good starting place for individuals with a long-term investing view, particularly as cultural changes and operational recovery advance. Watch Boeing's developments; they will be vital for its future success.
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Boeing Q3 Earnings: Revenue And Profit Decline, Cultural Challenges, CEO Ortberg Vows Transformation
By: Benzinga | October 23, 2024
Boeing Co BA reported a 1% year-over-year revenue decline to $17.854 billion in the third quarter of 2024, missing the consensus of $17.931 billion.
Adjusted loss per share expanded to $10.44 from $3.62 in the same quarter of 2023, missing the consensus of $10.34.
The company stated that the results reflect the impact of the International Association of Machinists and Aerospace Workers (IAM) work stoppage and previously announced charges on commercial and defense programs.
Boeing recorded an adjusted operating loss of $5.989 billion for the quarter, compared to $1.09 billion a year ago. The core operating loss margin was (33.6%) Vs. (6%) a year ago.
Commercial Airplanes revenue fell 5% YoY to $7.443 billion, impacted by $3 billion in charges and higher expenses.
Deliveries declined by 10%; 116 airplanes were delivered, and the backlog included over 5,400 airplanes valued at $428 billion.
Defense, Space & Security revenue rose 1% year over year to $5.536 billion. The backlog was $62 billion, of which 28% represents orders from customers outside the U.S.
Global Services revenue grew by 2% YoY to $4.910 billion. The operating margin expanded 70 bps to 17%, reflecting higher commercial volume and mix.
Operating cash outflow for the third quarter totaled $1.35 billion, compared to cash provided of $22 million YoY; free cash outflow was $1.96 billion.
Debt was $57.7 billion, down from $57.9 billion at the beginning of the quarter. At the end of the quarter, cash and investments in marketable securities totaled $10.5 billion, and the total company backlog was $511 billion.
Boeing 787 program is currently producing at 4 per month and maintains plans to return to 5 per month by year end. There were no 747 deliveries in 2024.
"It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again," commented Kelly Ortberg, Boeing President and Chief Executive Officer.
"Going forward, we will be focused on fundamentally changing the culture, stabilizing the business, and improving program execution, while setting the foundation for the future of Boeing," added Ortberg.
Ortberg acknowledged that the company is facing significant challenges, citing eroded trust, excessive debt, and performance lapses that have disappointed many customers.
Price Action: At the last check on Wednesday, BA shares were trading lower by 1.02% at $158.25 premarket.
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