Boeing Reports Significant Q3 Losses Amid Multiple Challenges

Boeing (BA.US) released its Q3 2024 earnings report today, revealing substantial losses and missed estimates across most metrics. The company continues to face headwinds from production issues, labor disputes, and operational challenges. The results reflect the ongoing impact of the International Association of Machinists and Aerospace Workers strike and previously announced charges on commercial and defense programs. The implied one day move based on historical averages is 4.78%. Market reaction is muted as EPS came close to expectations. The shares are down 1% to $158.34 in pre-market trading.

Boeing Q3 2024 results:

• Revenue: $17.84 billion vs $17.89 billion expected (-1.68% YoY)
• Core loss per share: -$10.44 vs -$10.34 expected
• Operating cash flow: -$1.35 billion vs -$1.99 billion expected
• Adjusted free cash flow: -$1.96 billion vs -$1.87 billion expected
• Backlog: $510.51 billion

Results vs Estimates Source: Bloomberg

Segment Performance:

• Commercial Airplanes:
  • Revenue: $7.44 billion vs $7.66 billion expected (-5.5% YoY)
  • Operating loss: -$4.02 billion vs -$3.15 billion expected
• Defense, Space & Security:
  • Revenue: $5.54 billion vs $5.60 billion expected (+1% YoY)
  • Operating loss: -$2.38 billion vs -$1.94 billion expected
• Global Services:
  • Revenue: $4.90 billion vs $5.02 billion expected (+1.8% YoY)
  • Operating earnings: $834 million vs $853.2 million expected (+6.4% YoY)

Key Business Metrics:

• Cash and investments: $10.5 billion
• Credit lines: $20 billion (undrawn)
• 787 production rate: 4 per month (plans to return to 5 per month by year end)
• Total backlog includes over 5,400 commercial airplanes

CEO Kelly Ortberg outlined a comprehensive turnaround plan focusing on:

1. Fundamental culture change
2. Stabilizing the business
3. Improving program execution
4. Setting foundation for future growth

Ortberg emphasized: "Trust in our company has eroded... It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again."

Key Challenges:

• Ongoing labor strike affecting production
• Regulatory-imposed production caps on MAX aircraft
• Supply chain disruptions
• Mounting debt concerns
• Credit rating at risk of falling to junk status

The stock closed at $159.96, down 14.45% over the past 3 months and 12.33% over the past 12 months. The company faces significant near-term headwinds as it works to address operational challenges and rebuild trust with stakeholders.

The company is focusing on stabilizing operations before considering new aircraft development programs, with Ortberg noting that Boeing has "a lot of work to do" before developing a new airplane. This includes improving execution on current development programs and restoring the balance sheet.

The price is approaching 50-day SMA, which will be first test for bulls. If succesful, 100-day SMA at $170.71 might be retested. RSI and MACD are also suggesting bullish divergence. The shares are down 1% to $158.34 in pre-market trading.

Source: xStation