Bad news for summer travelers. If you were thinking about a trip this year—possibly one you’d been putting off since COVID-19 kicked in and all—you may have put it off longer. New reports suggest that the trouble at aircraft maker Boeing (NYSE:BA) won’t do any favors for summer travel, but that news didn’t hurt Boeing’s position much. It was up fractionally in Monday afternoon’s trading.
The latest reports note that Boeing has been under intense demand from regulators—not to mention anyone who has to fly aboard a Boeing aircraft—to improve quality. This, naturally, will come at the cost of production and mean a lot fewer aircraft rolling off Boeing’s assembly lines. Under normal circumstances, this would mean a huge opportunity for competitors.
However, here, there’s only one real competitor worth speaking of, and that’s Airbus (OTHEROTC:EADSY). The problem, though, is that Airbus can’t capitalize on this because it’s suffering from a string of supply chain problems that will leave it unable to ramp up and fill in the Boeing gap. That means fewer planes, fewer flights, and higher price tags on the ones that are left.
It Gets Worse from There
But that’s not all the problem Boeing will face. In fact, its upcoming earnings release this Wednesday will almost certainly be packed with questions, starting with potential CEO replacements and, of course, its plunge in 737 MAX jet production. Furthermore, its cash-burn rate is expected to explode as it’s largely unable to cut costs while making and selling fewer aircraft.
However, a former Airbus head, Paul Eremenko, offered up three ways to salvage Boeing: make sure the new CEO is an “airplane geek,” not a “bean counter;” make all employees shareholders; and finally, establish a new goal to make a completely zero-emission plane to unify the company and produce something few, if any, have ever seen.
Is Boeing a Good Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 17 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 16.68% loss in its share price over the past year, the average BA price target of $230.56 per share implies 34.85% upside potential.
Is It Wise to Allocate $1,000 Toward BA Stock Right Now?
Before you hurry to invest in BA, think about the following:
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