A Boeing 737 jet in Mexico this month. Air travel has taken off relative to this time last year.
Daniel Slim/AFP via Getty Images
Boeing just might have posted the biggest earnings miss that doesn’t matter in Wall Street history. After problems with the 737 MAX jet and Covid-19, expectations for first-quarter earnings were low. Boeing ‘s future, and the stock price, are tied to its internal turnaround and the commercial aerospace recovery.
Boeing (ticker: BA) lost an adjusted $1.53 per share from $15.2 billion in sales. Wall Street was looking for a 90-cent loss from $15.1 billion in sales. That is a big miss, but Boeing has lost money for six consecutive quarters, for a total of almost $27 a share since the start of 2019. The Boeing 737 MAX jet was grounded worldwide that March following two deadly crashes inside of five months.
Free cash flow was OK. Boeing burned through about $3.7 billion in the first quarter, while Wall Street was looking for $3.3 billion. Boeing has used up cash for eight consecutive quarters, consuming more than $21 billion since the start of 2019.
Investors don’t appear to be overreacting to the latest figures. Boeing stock was down less than 1% in premarket trading. S&P 500 futures, for comparison, were up slightly. Dow Jones Industrial Average futures were down 0.2%.
Boeing management acknowledged recent difficulties in its news release, but still struck an optimistic tone. “While the global pandemic continues to challenge the overall market environment, we view 2021 as a key inflection point for our industry as vaccine distribution accelerates and we work together across government and industry to help enable a robust recovery,” said CEO David Calhoun.
Boeing delivered 77 commercial aircraft in the first quarter. That is roughly half of what the company delivered in the first quarter of 2019, but it is up from 50 deliveries in the first quarter of 2020.
What’s more, the company has delivered 85 MAX jets since having the plane recertified to fly by global aviation authorities. Boeing still plans to ramp up production to 31 a month by early 2022.
That is a key number for investors and says something about how fast airlines will take the 400-plus planes that were built and parked while the MAX was grounded. Taking the planes out of inventory will help slow Boeing’s cash burn.
Aside from the MAX, Boeing is making five wide-body 787 jets a month now. In line with Wall Street expectations.
Defense sales of $7.2 billion topped commercial aircraft sales of $4.3 billion. Last year, commercial aerospace was still larger than defense. Defense revenue was boosted by higher sales of aircraft-refueling tankers.
Management scheduled a conference call for 10:30 a.m. Eastern time to discuss the results. Analysts and investors will be eager to hear about aircraft production and cash flow, as well as the recovery in commercial air travel.
Over the past seven days, U.S. commercial air travel has been up 1,000% year over year, but is still down about 40% from 2019 levels.
Write to Al Root at [email protected]
