Boeing stock rises NYSE:BA

 

Boeing stock rises NYSE:BA

The shares of aerospace giant Boeing (NYSE: BA) have recovered strongly from their post-pandemic lows at $ 113.02 to reduce their annual losses to (-24%). While the pandemic has knocked Boeing down, it is benefiting from the travel industry's recovery at the epicenter. 

The company saw an increase in demand for commercial aircraft as commercial traffic accelerated to the highest level since COVID 2019 in both North America and Europe as China lags behind. Major carrier customers include Southwest Airlines (NYSE: LUV), Delta Air Lines (NYSE: DAL) and United Airlines (NYSE: UAL). 

Boeing also recorded a positive cash flow of $ 100 million, which is a huge improvement over the previous year. The company expects positive cash flow for the rest of 2022. The company is awaiting clearance from the Federal Aviation Administration (FAA) to begin delivery of the 787. 

The company has an order backlog of $ 372 billion, which includes over 4,200 commercial aircraft. There is strong speculation that Boeing will return to profitability in the Q3 2022 financial year after the 737 MAX disaster. 

The company is ready to turn the corner and emerge stronger from it. There are still headwinds, including supply chain constraints, logistics, raw material costs, inflationary pressures and high fuel costs. However, Boeing is very optimistic about the recovery of air traffic, which strengthens the demand for its aircraft, as airlines are replenishing their fleets. Prudent investors looking for exposure to the aviation recovery may be on the lookout for opportunistic setbacks at Boeing.

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Earnings release Q2 Financial year 2022

On Jan. 19, 2022, Boeing released its results for the second quarter of 2022 for the quarter ending June 2022. The company reported earnings per share (EPS) of (-0.37 USD) excluding one-time effects against analysts' consensus estimates for a loss of (-0.10 USD), a loss of (-0.27 USD).

 Revenue fell year-on-year (year-on-year) to $ 16.68 billion (-1.9%), analysts' estimates for $ 17.53 billion were missing. The company generated positive operating cash flow of $100 million. The total order backlog of over 4,200 commercial aircraft orders rose to US$372 billion. The company increased production from 737 to 31 per month and was waiting for FDA clearance for 787 deliveries. Dave Calhoun, CEO of Boeing, commented: "We made significant progress on key programs in the second quarter and are building momentum in our turnaround.

 As we begin to reach key milestones, we have been able to generate positive operating cash flow this quarter and remain on track to generate positive free cash flow for 2022. While we are making significant progress, we still have more work ahead of us. We will continue to focus on safety, quality and transparency to promote stability, improve performance and continue to invest in our future.”

Conference Call Takeaways

CEO Calhoun began with a recap of the Farnborough Air Show, where he witnessed the 777X in flight and its investment in the eVTOL market by Wisk. They met with suppliers, customers and partners and collected over 200 orders and commitments for the entire range of aircraft from 737MAX to 777X this week. It underlined the expectation of flight renewal projects.

 Your customers are busy and are strengthening their fleets in the face of supply chain constraints. He noted a lot of positive aspects in the quarter, including the incredible performance of the 737 MAX and the fact that the delivery of the 787 is imminent after approval by the FAA.

 They prioritize supply chain predictability and focus mainly on the engine supply lines and the constraints that engine suppliers face. Business with commercial services grew by 30%, with strong margins. The operating cash flow developed positively ahead of schedule and is expected to remain positive until calendar year 2022.

 Supply bottlenecks do not prevent the increasing demand of customers from converting their aircraft fleets for the future in order to meet the significant demand of passengers. COVID is slowing China, but together with the geopolitical overhang, it should not affect the positive attitude of cash flow during the year. Global Services is back on the "big road".