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Boeing Profit Falls as Executives Point to Turnaround

U.S. manufacturer has increased production and deliveries of its 737 MAX amid supplier bottlenecks

Boeing Co.  said its quarterly profit fell as it awaited regulatory approval to resume deliveries of its 787 Dreamliner and charges continued to mount at its military and space unit.

The company said its second-quarter results showed it was making progress in stabilizing its operations after a series of production and regulatory problems have prevented it from delivering commercial aircraft on time and without quality issues.

“We do believe we’re in the middle of a momentum shift,” Chief Executive David Calhoun said in a call with analysts Wednesday.

Boeing shares were recently trading around even, having climbed more than 3% at one point.

Production of the 737 MAX has reached 31 planes a month, up from 16 a year ago, as it deals with supply-chain challenges such as engine shortages that are also affecting rival Airbus SE, which also reported earnings Wednesday. Boeing has said it stepped up 737 deliveries in June.

Excerpt from WSJ
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Boeing Needs to MAX-imize Its Recovery

737 MAX deliveries are key if the plane maker is to generate cash this year, but maintaining June’s positive trends won’t be easy

The once-troubled 737 MAX jet now carries Boeing investors’ hopes and dreams.

On Wednesday, the Arlington, Va.-based plane maker reported second-quarter earnings that fell short of Wall Street expectations. Still, free cash flow, which is a more important metric, was better than forecast thanks to a jump in MAX deliveries. If it keeps this going, Boeing should hit its target of positive cash flow for the year for the first time since 2018.

To be sure, defense revenues continued to disappoint and U.S. regulators still haven’t cleared the way for its other key product, the 787 Dreamliner, following a series of defects. But deliveries seem set to resume this summer, and the fallout from the war in Ukraine will probably soon send a wave of cash toward defense contractors.

The fate of the MAX is subject to many more unknowns, both positive and negative. It may be the key driver of Boeing’s stock, which is down more than 50% since the onset of the pandemic but still not an obvious buy. The plane maker is trading at an enterprise value of around 12 times expected 2024 earnings—the year when travel is expected to fully recover. This is in line with pre-Covid valuations, but those were historically elevated.

On the one hand, the MAX is selling better than its detractors predicted. During last week’s Farnborough International Airshow, it garnered 233 orders, including 100 planes by Delta Air Lines —the only top U.S. carrier that hadn’t yet bought it. This compared with 73 orders for Airbus’s  competing A320 family. The A320 remains more popular overall. Counterintuitively, though, this may work in favor of the MAX right now, as airlines are much more likely to get their planes ahead of time. While the A320 has a backlog of around 6,000 orders, the MAX’s is closer to 3,400 due to cancellations in recent years.

Excerpt from WSJ
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Over 1,000 Aircraft Orders Behind: How Can Boeing Catch Up to Airbus?

Boeing entered Farnborough Airshow behind Airbus, particularly in the narrow-body jet market

Boeing is typically nearly tied for orders with rival Airbus entering the annual Farnborough Airshow, but this year it's well behind. WSJ’s George Downs reports from the show on how Boeing is trying to catch up and what it will take to restore balance to the aviation duopoly.

Excerpt from WSJ

Delta Lets Travelers Change Flights for Free Over Fourth of July Weekend

Carrier is offering more flexibility as it expects some challenges despite efforts to reset operations

Delta’s broad waiver underscores the challenging conditions that travelers could encounter this weekend.

Nervous about flying during a busy holiday weekend? Delta Air Lines Inc. has an alternative: don’t.

Delta is allowing customers to change flights for free, letting them rebook trips before or after potentially challenging weekend days without paying a higher last-minute fare or a change fee.

The waiver will apply across Delta’s entire network for July 1 through July 4, as long as customers travel between the same origins and destinations by July 8.

Delta said it expects some challenges this holiday weekend, despite efforts by the company and its staff to reset the carrier’s operations.

Excerpt from WSJ
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