Boeing Ready For Takeoff

  • 737 Max gets some key votes of confidence.
  • Revenue bottom is likely in rear view mirror.
  • We are closer to a coronavirus vaccine now.

It’s been a tough couple of years for aerospace giant Boeing (BA). Troubles with the 737 Max plane and the coronavirus have led to historic losses and cash burn for the company. That has resulted in a dividend and buyback suspension, a mountain of debt piling up, and a stock that has cratered. Fortunately, it looks like we can now see the light at the end of the tunnel, and investors might want to consider getting in now before things really start turning.

There have been a couple pieces of good news for the company in recent days, which has helped the stock get back towards the $170 level. The 737 Max got a key vote of confidence from Europe’s top aviation regulator late last week, and that could easily pave the way for the FAA to add its blessing rather soon. Over the weekend, American Airlines (AAL) announced it would operate a daily 737 Max flight in the US right before year’s end. Once a major carrier makes a move like this, others are soon to follow.

Beyond the issue with the Max, the coronavirus has disrupted air traffic around the globe and also impacted other areas of Boeing’s business. However, things have been improving over time, as Sunday marked the first day where the US passenger count topped 1 million since March. As the graphic below shows, year over year declines are improving, even if they aren’t coming back as quickly as some had hoped.


(Source: TeslaCharts Twitter, seen here)

Everyone is looking for good news on the coronavirus front. Earlier this week, the CEO of Moderna (MRNA) said that we could see emergency approval for its vaccine candidate in December. Multiple clinical trials are in the advanced stages currently, so, hopefully, we’ll get some positive news soon. As a point of reference, holiday travel searches this year were down 43% this summer as compared to 2019. As one associate professor at Adelphia University said, “having a vaccine will be a sign for many travelers that they can travel freely again”.

As a result of the items mentioned above, Boeing has seen a major decline in deliveries as well as net orders. The company has slowed down production across a number of lines, but customer deferrals have led inventory to jump by more than $15 billion for the twelve-month period ending in Q2 2020. Between that rise and huge losses, Boeing has burned through billions in cash, requiring a lot of new funding.