Ready for takeoff
Boeing (BA) is set to start delivering its 787 Dreamliners as early as March 26, ending a five-month drought while the company mechanics looked for tiny structural flaws. Better safe than sorry with those crazy flying contraptions, we always say. Prices lift 3.32% on the news.
Boeing is looking to hand over up to three jets this month after cutting its planned 2021 787 production goals from six jets to five, monthly, in the face of the slow recovery of the long-haul travel sector.
In 2019, Boeing was making 14 Boeing 787s monthly, but amid the pandemic the firm delivered just 53 jets in 2020, which is less than five monthly on average. The delivery slowdown led to a swelling of the company’s jet stockpile, which currently stands at about 80. Boeing burned through $20 billion last year, so the ability of the planemaker to generate cash in the coming years does depend on how quickly it’s able to unwind its stacked-up jets. However, there is a concern that customer airlines facing their own cash flow problems might look to defer delivery and change their payment schedules, which could have a knock on effect on Boeing.
The 787 might be struggling, but other Boeing jets have done rather better, particularly the 737 MAX jet, which is key to the company’s financial recovery in 2021. Boeing has already exceeded 50% of its 2019 figure just a few months into the year, with 26 deliveries in January alone, and customers have been eating them up. Can the company begin to take back the market share it lost while grounded? In order to get back to its 2018 levels of profitability, Boeing will have to get back to pre-2019 order numbers and manufacturing levels, which could still be a while away.
Boeing’s $63.5 billion debt burden might also be a worry to investors, but there’s an expectation that the debt ballooning could soon cease - and hopefully its $25 billion in cash, equivalents, and short-term investments will give the company blue skies back to profitability.
NYSE