Tough questions await Boeing when it announces its results on Wednesday, including on potential CEO candidates, talks with Spirit AeroSystems and slumping 737 MAX jet output, while its quarterly report is expected to show a surge in cash-burn rate.
The U.S. planemaker, which is reeling from a safety crisis
sparked by a Jan. 5 mid-air door plug blowout on a 737 MAX 9 jet, is also
expected to report its first revenue fall in seven quarters, according to LSEG
data.
Boeing's stock has slipped 34% this year, underperforming
the benchmark S&P 500 index, while shares of European rival Airbus are up
about 15% over the same period.
"I don't think anyone's going to be shocked by pretty
bad (results)," said Tony Bancroft, portfolio manager at Gabelli Funds
which owns 260,709 shares in Boeing. He expects the company to reiterate
messages stressing safety.
The Federal Aviation Administration (FAA) has imposed a cap
of 38 jets a month following the blowout, blamed on an assembly error. But the
monthly output rate is fluctuating well below this level and in late March fell
as low as single digits, Reuters had previously reported.
Boeing declined to comment ahead of earnings.
Analysts have warned the slow pace of deliveries risks
delaying Boeing's financial and production goals.
"The longer the FAA's oversight pressures monthly
aircraft deliveries on production, the more challenging it would be for Boeing
to meet its 2025/2026 aircraft production and $10 billion free cash flow
targets," Morgan Stanley analyst Kristine Liwag wrote in a note.
Boeing is aiming to produce 50 737s and 10 787s per month in
that timeframe, which it sees as key milestones as it works to accelerate its
recovery from an earlier crisis after two MAX jets crashed in 2018 and 2019.
The door plug blowout has led to a management shakeup with
investors keen to see who will take over after outgoing CEO Dave Calhoun leaves
at the year end.
Bancroft said he remains a buyer of Boeing stock in the long
term as he believes the new CEO could "throw the kitchen sink" at the
planemaker's problems.
Spirit CEO Patrick Shanahan, along with GE Aerospace CEO
Larry Culp have been floated, among others, as possible successors to Calhoun.
None have said they are pursuing the job.
"The most pressing question among Aerospace investors
today is who will be the next Boeing CEO," RBC Capital Markets analyst Ken
Herbert wrote in a note.
Calhoun's successor will likely be tasked with integrating
Spirit, if a deal to acquire the 737 fuselage supplier is completed.
Price remains an obstacle to a deal, a source familiar with
the matter told Reuters last week. Spirit's Belfast plant which makes the wings
for the Airbus A220 jet, for example, is losing money.
Analysts are expected to quiz Boeing executives about the
progress and structure of the proposed deal, which Reuters has reported might
lead to Spirit Aero's breakup, with both planemakers taking over plants that
support their top jet programs.
Spirit had a market value of about $3 billion before reports
of the talks emerged. Boeing has said it expects to fund the deal with cash and
debt.
The planemaker had consolidated debt of $52.3 billion and
cash and cash-equivalents of $12.69 billion at the end of 2023. It had $10
billion of unused borrowing capacity on revolving credit line agreements.
Analysts polled by LSEG expect Boeing to report a
first-quarter adjusted loss of $1.76 per share and a $4.5 billion cash burn.
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