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18 hours ago
Boeing taps debt market to raise $10 billion, sources say
By: Reuters | April 29, 2024
Boeing on Monday tapped debt markets to raise $10 billion, after the U.S. planemaker burned $3.93 billion in free cash during the first quarter following slowing production of its best-selling jet, sources familiar with the matter said.
Boeing's credit rating hovered above "junk" status last week after new action from rating agencies as the planemaker tries to recover from a crisis that began in January after a midair blowout of a cabin panel door plug on a nearly new 737 MAX 9.
Investors and analysts have said that Boeing could tap bond markets to get ahead of more than $12 billion in combined debt coming due in 2025 and 2026.
Credit rating agencies on Monday both assigned ratings nearing junk to Boeing's new senior unsecured notes, with S&P assigning a BBB- rating and Moody's assigning a Baa3 rating.
Moody's said the rating reflects Boeing's still-strong business profile, which continues to mitigate ongoing weak performance in commercial aircraft, although headwinds surrounding the division could persist through 2026.
Boeing will use the bond proceeds to increase its liquidity ahead of maturities on its existing debt load, including $4.3 billion in 2025, S&P wrote on Monday.
"It looks like it will go well," said one of the sources, who was looking at buying the bonds, adding that he was told it was eight times oversubscribed.
The deal's bookrunners leading the bond sale include Bank of America, Citi, JPMorgan and Wells Fargo, according to the deal's term sheet.
Boeing, whose shares rose 3.4%, is pricing bonds that have maturities ranging from three to 40 years, according to the term sheet. The bonds were set to price with a premium of 10-15 basis points to Boeing's outstanding bonds after, as strong demand during the sales period allowed Boeing to reduce the amount of concession offered, one banking source said.
The sharp tightening of spreads is reflective of overwhelming demand for the bonds, with order books earlier in the day said to have reached over $70 billion, two bank syndicate sources said.
Boeing declined to comment, but pointed to remarks from Chief Financial Officer Brian West during the company's earnings last week in which he said the company was committed to managing its balance sheet in a prudent manner, with the goal of prioritizing its investment-grade rating and helping the factory and supply chain to stabilize.
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2 days ago
Fitch downgrades Boeing's outlook to 'negative' on production, cashflow challenges
By: Reuters | April 26, 2024
Fitch Ratings downgraded outlook on Boeing BA to "negative" from "stable" on Friday, amid a fallout from safety crisis impacting the U.S. planemaker's production and cashflow.
The ratings agency, which reaffirmed its "BBB-" long-term issuer default rating, said it could stabilize the outlook if Boeing liquidates over 100 of its pre-2023 built 737 MAX and half of its 787 inventories by early 2025, along with increasing production of its MAX jets towards 38 per month.
Fitch's downgrade follows similar moves by S&P and Moody's earlier in the week on its bumpy cashflow.
Boeing has been under heavy regulatory scrutiny and lowered production of its 787 widebody jets, along with 737 MAX, after the cabin panel blew off an Alaska Airlines-operated ALK 737 MAX 9 flight mid-air, forcing an emergency landing.
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4 days ago
Airbus posts drop in earnings raising fears it may struggle to profit on Boeing's woes
By: MarketWatch | April 26, 2024
Airbus on Friday said an increase in its costs, caused by inflation and supply chain issues, had seen its adjusted earnings drop in the first quarter of 2024, even as sales of its aircraft increased against the backdrop of ongoing problems at its main rival Boeing.
Strong demand for new planes, driven in part by the disruption at Boeing (BA), saw the Toulouse headquartered company boost its revenue by 9%, to EUR12.8 billion, as it delivered 142 commercial aircraft to its customers.
Higher costs, however, cut into Airbus' profit margins, leading to concerns the company may struggle to capitalize on Boeing's issues. The company blamed the higher costs on a series one-off issues, alongside the impacts of supply chain problems, increased R&D costs, and wage inflation.
The drop in Airbus' margins, in turn, saw the European plane maker fall short of analysts' expectations, as it posted a 25% drop in its adjusted earnings before interest and tax (EBIT) to EUR577 million ($620 million), compared to the EUR809 million expected by eight analysts, Factset data shows.
Shares in Airbus (FR:AIR) fell 2% on Friday after gaining 25% over the previous 12 months. Airbus stock is, however, down 7% since the start of April, which RBC's analysts said was a result of investors focusing on the company's "elevated spending" on fixing ongoing supply chain issues.
Airbus, nonetheless, held its guidance for 2024, in stating it still expects to generate EUR6.5- EUR7 billion in adjusted EBIT across the full-year, even as analysts at UBS, led by Ian Douglas-Pennant, said they now expect Airbus will hit the lower end of that range.
In a call with investors, Airbus CEO Guillaume Faury said the higher first quarter costs were partly caused by over EUR100 million in "expenses linked to the Employee Share Ownership Plan" and EUR30 million from exchange rates, which he said would not be repeated.
The UBS analysts said Airbus' results were "disappointing" across all divisions and they noted EBIT "barely increased," even excluding the higher costs linked to the employee share plan and foreign exchange.
The Airbus CEO also warned that supply chain issues that have plagued the company for over a year are "not improving", saying the company is "pouring a lot of human resources" into fixing the "difficult situation."
RBC analysts, led by Ken Herbert, nonetheless, said Airbus is now well positioned to boost its earnings long-term, as they said the "strong demand environment" should still boost the company's business going forwards.
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7 days ago
Boeing Slows Production of Its 787 Jet. Relax, It's Not a Quality Problem
By: Barron's | April 23, 2024
Boeing is set to slow production of its twin-aisle 787 Dreamliner jets. Shares are unaffected. Investors appear to be giving the company a pass since it isn't a quality problem — and because they hear from Boeing Wednesday morning when it reports first-quarter earnings.
The production slowdown is due to a parts shortage, according to Reuters, citing an internal memo. Boeing confirmed the memo's accuracy but declined to comment further citing its quiet period ahead of quarterly earnings.
Boeing produced about five 787 jets a month in 2023. The company also ended the year with about 50 built, but undelivered jets in its inventory, a consequence of a year-long delivery pause starting in 2021 to fix quality problems.
The current slowdown doesn't appear to be related to old issues. "We continue to manage through supplier shortages on a few key parts," reads part of the memo. "To that end, we have shared with our customers that we expect a slower increase in our rate of production and deliveries."
Supply-chain issues have been relatively common since COVID-19. Boeing peer Airbus cited supply chain challenges at its annual shareholder meeting on April 10.
Boeing stock hasn't been affected by the report yet. Shares were up 0.2% in premarket trading, at $170.85 a share, while S&P 500 and Dow Jones Industrial Average futures were up 0.1%.
Coming into Tuesday's trading, Boeing shares were down about 35% year to date. Most of that drop happened after an emergency door plug blew out of a 737 MAX 9 jet operated by Alaska Air on Jan. 5. The incident has led to slower MAX production, compensation paid to airline customers, and more Federal Aviation Administration oversight.
Boeing delivered 13 787 jets in the first quarter of 2024, up from nine in the first quarter of 2023. Boeing delivered a total of 63 787 jets in 2023.
Investors will get a chance to hear from management about the 787, 737, production, quality, and other topics when Boeing reports first-quarter results on Wednesday morning.
Wall Street is looking for a per-share loss of $1.63 from sales of $16.2 billion, according to FactSet. A year ago, Boeing reported a per-share loss of $1.27 from $17.9 billion in sales.
The company hosts a conference call at 10:30 a.m. Eastern time.
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2 weeks ago
RBC cuts Boeing's PT on expectations for fewer 2024, 2025 737 MAX deliveries
By: Reuters | April 16, 2024
** RBC Capital Markets cuts PT on Boeing BA on expectations for fewer 737 MAX deliveries in 2024, 2025
** Stock edged up 0.11% at $167.93 in premarket trade
** Cuts PT by $10 to $215, expects Boeing to remain at a low production rate on the MAX for much of 2024
** Also expects co to eventually acquire Spirit AeroSystems SPR, but adds co's execution on expected rate increases would require substantial investments
** "We do not believe BA has the financial flexibility to launch this (new narrrowbody jet) in the near-term, but its share position in the important narrowbody market will likely necessitate some action here" - Brokerage
** Median PT on the stock is $240, as per LSEG data
** YTD, BA down ~36%
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3 weeks ago
Bear of the Day: Boeing (BA)
By: Zacks Investment Research | April 12, 2024
Boeing (BA) has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft, along with varied defense products, positions it as one of the largest defense contractors in the United States.
Analysts have taken their earnings expectations lower across the board, landing the stock into a Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Let’s take a closer look at how the company currently stacks up.
Boeing
Shares have faced turbulence year-to-date, down 33% and representing one of the worst-performing S&P 500 stocks in 2024. Operational issues have become a significant thorn in the company's side, souring investors’ opinions overall.
Image Source: Zacks Investment Research
Analysts have fully noted the issues, reflected in their negative revisions. The safety issues are undoubtedly expected to impact the company significantly, and the FAA has stated it won’t allow Boeing to ramp up production for any of its Max family of aircraft.
Mike Whitaker, FAA Administrator, said, “This won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved.”
We’ll undoubtedly hear more about the situation during the company’s next quarterly release, expected on April 24th. Revenue revisions for the quarter-to-be-reported have similarly been slashed, with the $18.9 billion Zacks Consensus Sales estimate down 8.2% since mid-January.
Image Source: Zacks Investment Research
Bottom Line
Analysts' negative earnings estimate revisions, resulting from operational issues, paint a challenging picture for the company’s shares in the near term.
Boeing (BA) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.
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3 weeks ago
Boeing won’t even consider moving HQ back to Seattle
By: CNN | April 11, 2024
It’s been a brutal six years for Boeing, with two fatal jet crashes kicking off a series of safety crises — and raising concerns about the quality and safety of the planes rolling off its assembly lines.
As Boeing scrambles to repair its reputation, some critics and shareholders are asking: Why not move headquarters away from the shadow of Washington, D.C., and back home to its roots in Seattle?
But Boeing has now made clear: We are not interested.
An individual Boeing stockholder, Walter Ryan, wanted to put the question of a move up for a vote during the company’s May 17 annual shareholder meeting. He filed his proposal in October for the shareholder vote, which would have been non-binding — but in February, Boeing went to the Securities and Exchange Commission, ultimately winning approval to block the vote.
Ryan, who owns 10,000 shares of Boeing stock, lives in Las Vegas and has never been to Seattle. But he believes that if Boeing is to fix its current quality and safety problems, the company’s top management should be back in Seattle — near where most of its commercial aircraft are still manufactured.
“I think they need some hands-on overseeing, and by som ebody who has skin in the game,” Ryan told CNN.
Boeing’s corporate offices had been in Seattle from its founding in 1916 until it relocated to Chicago in 2001. Then in 2022, Boeing corporate moved again — this time to Arlington, Virginia, near the Pentagon and across the river from Capitol Hill. Most manufacturing, however, remains more than 2,300 miles away in Seattle.
“They want to be next to government,” Ryan said. “Is that a sound idea? I don’t think so.”
It isn’t only shareholders like Ryan who believe a return to Seattle would benefit Boeing.
“Part of it would be symbolic,” said Shem Malmquist, a Boeing 777 pilot and instructor of aviation safety at Florida Tech. “But it’s also going to be better culturally. In the end, the closer the top management is to the production and what’s going on and the engineers, the better.”
Boeing’s response
In his proposal he wanted presented to shareholders, Ryan said the corporate move from Seattle and separation from the core manufacturing business resulted in major issues related to “engineering and quality problems, and Boeing’s historic credibility,” — concerns he said are now foremost “in the minds of both travelers and shareholders.”
Ryan wrote the proposal even before a headline-grabbing incident in January, when the door panel of a Boeing 737 Max blew off in the middle of an Alaska Airlines flight, later found to be because the aircraft left the factory missing crucial bolts needed to keep it in place.
Boeing’s attorneys argued to the SEC that this isn’t an appropriate issue for shareholder vote: “The proposal seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”
Further, Boeing’s attorneys dismissed the premise of Ryan’s argument, calling it “an unsupported theory that certain manufacturing issues experienced by Boeing would have been avoided simply because the company’s headquarters were located in a particular city, emphasizing, among other things, management’s ability to walk the factory floor.”
The SEC agreed that Boeing it did not need to put Ryan’s proposal on its proxy statement, which was released Friday. Boeing told CNN it did not have any comment beyond those included in its filing to the agency.
Ryan said he believes his proposal — which would have allowed shareholders only to “recommend” a move back to Seattle, not mandate it — would have won had it been put up for a vote.
“That’s why I sent it in. I thought it would pass, and thought it would be a good idea,” he told CNN.
Speaking broadly, however, even shareholder proposals that are put to a vote are not likely to pass — especially recently.
According to Institutional Shareholder Services, which tracks shareholder votes, only 5.4% of votes held in 2023 on shareholder proposals received majority support. That’s down sharply from 12.6% in 2022, and 19.5% in 2021.
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3 weeks ago
Boeing (BA) Stock Falls After Another In-Flight Issue, Bear Note
By: Schaeffer's Investment Research | April 8, 2024
• A Boeing 737-800 engine cover flew off during a Southwest Airlines flight
• Bernstein lowered its price objective to $240 from $272
Boeing Co (NYSE:BA) is in the spotlight yet again, after news that the Federal Aviation Administration (FAA) is investigating an incident in which a Boeing 737-800 engine cover flew off during a Southwest Airlines (LUV) flight and hit the aircraft's wing flap on Sunday. Additionally, CEO David Calhoun reportedly earned a 45% raise to $33 million last year.
The equity also attracted a price-target cut from Bernstein to $240 from $272. The analyst in question said the equity is in a "purgatory situation" amid recent issues. Brokerages are still bullish, however, with 15 of the 21 firms in coverage calling the stock a "buy" or better, while the 12-month consensus target price of $244.80 is a 33.7% premium to current levels.
The shares were last seen down 0.2% to trade at $182.73. The 20-day moving average is acting as pressure, but a new floor has also emerged at the $180 level. BA is down 29.4% in 2024.
While calls outpace puts on an absolute basis, Boeing stock's 50-day put/call volume ratio over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 98% of annual readings. This means puts have been getting picked up at a quicker-than-usual clip lately.
What's more, the equity's Schaeffer's Volatility Scorecard (SVS) sits at a high 98 out of 100. This means BA exceeded option traders' volatility expectations in the past 12 months.
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3 weeks ago
Southwest flight from Denver makes emergency landing after 'mechanical issue,' airline says
By: ABC News | April 7, 2024
A Southwest Airlines flight had to make an emergency landing Sunday morning after the engine cover detached during takeoff, according to the Federal Aviation Administration.
The Boeing 737-800 aircraft, which had been scheduled to fly from Denver to Houston, landed safely back at Denver International Airport just after 8:00 a.m. and was towed to the gate, according to the airport and airline.
According to the FAA, which is now investigating the incident, crew members aboard the flight said "the engine cowling fell off during takeoff and struck the wing flap."
In a statement, Southwest Airlines said the flight "landed safely after experiencing a mechanical issue." Customers were rebooked on other flights, and maintenance teams are now inspecting the plane, the airline said.
Footage taken by some passengers showed what appeared to be part of the plane hanging off and flapping in the breeze.
"It all blew away," one person can be heard saying in a video taken by passenger Lisa C., after which several people on board can be heard breaking out in cheers as the plane touches back down.
The engine cowling "peeled off within the first 10 minutes" of the flight, Lisa C. told ABC News.
"We all felt kind of a bump, a jolt, and I looked out the window because I love window seats, and there it was," she said.
Another passenger, Cooper Glass, told ABC News the experience was "frightening."
"People in the exit row across from me started yelling up to the flight attendants and showed them the damage," Glass said.
Glass praised the pilot, whom he said "did a great job on landing."
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4 weeks ago
Boeing MAX Production Is at a Crawl. It Would Take 20 Years to Fill the Backlog at This Rate
By: Barron's | April 5, 2024
Boeing's 737 MAX production has slowed to a crawl. That's probably a good thing though airline customers might not agree. Boeing suppliers, on the other hand, should be all right — if Boeing can get its act together.
Boeing's targeted and Federal Aviation Administration-permitted MAX production rate is currently 38 a month. The company delivered 42 MAX jets in January and February. Boeing will report March deliveries in a few days. Investors shouldn't expect a big number.
"Cirium data shows that Boeing only test flew 13 MAX planes in March, similar to the 11 that it flew in February," wrote Vertical Research Partners analyst Rob Stallard in a report Thursday. Cirium is an aviation consultancy used by the industry and Wall Street.
All signs point to another month of around 20 MAX deliveries. Along with new production, Boeing is still delivering MAX jets built and parked during the worldwide MAX grounding between March 2019 and November 2020 following two deadly crashes within five months.
Melius analyst Robert Spingarn believes the first-quarter production rate will end up lower than 20 per month. There is a good reason for lower production. Boeing is working "to minimize traveled work," wrote the analyst in a report Friday.
Traveled work refers to doing jobs on the production line somewhere other than originally designed. Less travel work is a sign Boeing is trying to get its production system under better control. That change came in the aftermath of the early January emergency door plug blowout on a 737 MAX 9 operated by Alaska Air.
More control and better quality is a positive, but it does put short-term and long-term estimates at risk. Wall Street expects Boeing to deliver about 450 MAX jets in 2024, up from 387 delivered in 2023. In the long term, Boeing expects to produce 50 MAX jets a month. "Given the current state of the 737 ramp, Boeing's targeted rate of 50/month in 2025/2026 seems unlikely," added Spingarn.
Boeing has some 4,800 unfilled orders for 737 MAX jets. At 20 a month, that's 20 years of backlog. It's great to have a big backlog but Boeing's airline customers would balk. Things should improve, still, at 40 a month Boeing has 10 years of backlog and some airlines would be waiting longer than expected for new jets.
That has some implications for Boeing as well as the airlines. Jefferies analyst Sheila Kahyaoglu noted in a report that Boeing paid Alaska $160 million in compensation for the MAX 9 grounding and lost airline capacity. Extrapolating that payment to other airlines lacking MAX capacity is difficult — only one door plug blew off — but she expects Boeing to report more than $420 million payments to airlines for the first quarter. Boeing "expects additional compensation to be provided beyond Q1, the terms of which are confidential," added the analyst.
The production delays make life harder for the airlines and Boeing. There will eventually be an impact on suppliers too. Spirit AeroSystems and Hexcel are two at the biggest risk of estimate cuts, Kahyaoglu wrote. Both companies' estimates imply production rates closer to 38 a month; she now expects an average of about 30 MAX jets made a month in 2024.
Boeing can still take parts at a higher rate than it is making planes, but investors should, at least, be aware of the potential for cuts given how the year has started.
At 30 a month, it would take Boeing some 13 years to work through its existing MAX backlog. Production rates shouldn't stay at that level forever. Still, the entire aerospace value chain — from suppliers to airlines — is waiting for things to improve.
Boeing stock was up 0.4% in premarket trading Friday, while S&P 500 and Dow Jones Industrial Average futures rose 0.4% and 0.5%, respectively.
Coming into Friday trading, Boeing stock has fallen about 30% this year. MAX troubles have weighed on investor sentiment.
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4 weeks ago
Boeing Secures 5-Year Extension to Manage US Air Force Testing Facility in Utah
By: MT Newswires | April 2, 2024
Boeing BA secured a five-year extension to its operation and maintenance contract, worth up to $559 million, for the Little Mountain Test Facility at Hill Air Force Base, Utah, by the US Air Force.
The site tests the functionality of critical defense systems, including intercontinental ballistic missile force and nuclear modernization programs, among other projects.
Boeing has managed the facility for 50 years, the company said Tuesday.
Boeing shares were down about 1% in recent trading.
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1 month ago
$BA made a higher low on the weekly, if you think the uptrend will hold, you could long here with a stop under the last higher low, targeting a gap fill at the least
By: TrendSpider | March 29, 2024
• Trade idea using asymmetric reward-to-risk:
$BA made a higher low on the weekly, if you think the uptrend will hold, you could long here with a stop under the last higher low, targeting a gap fill at the least.
R/R ratio: 2.78
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