Industrials

Our 12-month target price of $147, cut $4, reflects a 26x multiple of projected 2025 EPS, in line with BA’s long-term historical forward average. We now see a 2024 operating loss per share of $0.31 (vs. our prior EPS estimate of $0.37) and cut our 2025 EPS estimate by $0.39 to $5.65. Today, BA noted that Q2 commercial aircraft deliveries are not likely to improve on Q1 levels, which were a woeful 83 units (including just 67 of the 737 MAX, BA’s flagship product). This jibes with our view (since February) that the recovery process from the Alaska Air flight 1282 incident could stretch on for a long period of time. We remain very skeptical that BA can achieve its goal of 50 units per month of the 737 MAX by 2025/2026. We think the FAA is likely to keep close scrutiny on BA’s facility floors and the ongoing process […]

Boeing (BA) shares fell 6.7% in recent Thursday trading after Chief Financial Officer Brian West said the aircraft manufacturers’ deliveries would not recover in Q2, remaining in line with Q1 due to ongoing production challenges. West confirmed that the Civil Aviation Administration of China has requested additional validation on a lithium battery, causing Boeing to halt airplane deliveries to China. This is expected to impact quarterly deliveries and cash flow, he said. The Boeing Defense, Space and Security division’s Q2 margins will be negative due to the cost pressure on the fixed-price development program, West said at the Wolfe Research Global Transportation & Industrials Conference. “Secondly, the factory actions that are happening in Puget Sound do have a knock-on effect on derivative programs,” the executive said.

Quality problems, regulatory delays, and eroding market share have many pundits wondering when Boeing will design an all-new single-aisle jet. The sooner the better goes conventional wisdom. The engines, however, might be the gating factor. Soon-to-be-retired CEO Dave Calhoun has been firm in his commitment to not design an all-new aircraft that could better compete with the Airbus A321. “I don’t want to fill a gap in a product line,” said Calhoun in November 2022. That view may have changed if technologies could deliver significant improvement. “I want to build a product that’s going to differentiate in a way that absolutely substitutes the airplanes that came before it,” added Calhoun. “That [cost] number has to be at least 20%, 25%, maybe 30% better than airplanes it replaces.” Engines play a big role in improving aircraft operating costs. A problem for Boeing is the next big thing in engine development might

Boeing’s CEO Dave Calhoun is asked at the company’s annual shareholder meeting if it would restore the dividend, suspended in 2020. Calhoun says Boeing first needs to regain financial stability, which it hopes to do by 2025 or 2026, and pay down debt. “That day will come,” he says. “We all look forward to it.”

By Dave Michaels and Andrew Tangel The Justice Department said Boeing violated a settlement reached three years ago over its employees’ role in two fatal jet crashes, exposing the company to potential criminal prosecution over one of the biggest crises in its history. Boeing admitted in January 2021 that two employees misled federal air-safety regulators over facets of the 737 MAX, but it entered into a form of corporate probation that allowed it to avert prosecution at the time. Now, prosecutors say the company failed to live up to obligations that it committed to in the $2.5 billion settlement. In January a fuselage panel blew off an Alaska Airlines 737 MAX, the same type of jet involved in the earlier accidents. The latest accident triggered a new criminal investigation and sparked fresh worries about a safety culture that Boeing was supposed to have fixed. The company also recently told regulators

Howmet CEO John Plant says he expects Boeing to trim suppliers’ orders toward lower production rates this year as the plane maker reverses a pledge to keep demand above current airplane output. “We had to completely redo our year,” says Plant on an investor call. He says it’s pivoting resources towards more output for Airbus jets, defense products and wheels for commercial trucks. He cautions this could change if Boeing and engine suppliers GE and Safran actually boost production. While wide-body demand is increasing, Plant says Howmet has cut its assumption for monthly 787 output to five from six, still above current build rates. Howmet surges nearly 14% to $75.95, and on pace for largest percent increase since November 9, 2020, when it rose 18.99%.