Boeing (BA) CEO Dave Calhoun has revealed that he is anticipating a slow recovery for airline traffic over the coming months, and that this could spell trouble for one of the major airlines, according to an interview with NBC.
“Air traffic levels will not be back to 100% by September. They won’t even be back to 25%,” Calhoun told NBC in the interview which is set to be aired today. “Maybe by the end of the year we approach 50%.”
He continued: “So there will definitely be adjustments that have to be made on the part of the airlines.” When the host asked if the current troubles might result in one of the major airlines folding, Calhoun responded, “Yes, most likely.”
A Boeing spokesperson later clarified that Calhoun was “speaking to the general uncertainty in the sector, not about any one particular airline” reports Bloomberg.
Earlier this month, the CEO told Fox Business News that the 737 MAX assembly lines should restart in May. “The MAX problem” delayed Boeing two years said Calhoun, but he is now “confident we will (re-)start our line this month.”
Overall the stock shows a cautious Moderate Buy consensus from the Street, with 11 recent hold ratings vs just 6 buy ratings and 1 sell rating. Meanwhile the average analyst price target indicates 27% upside potential from current levels. That’s with BA trading down 60% on a year-to-date basis. (See Boeing stock analysis on TipRanks).
The company’s recent $25B debt offering eliminates the need for government aid and provides flexibility to make it through to the end of 2022 in a tough environment, notes Cowen & Co’s Cai Rumohr.
He adds that the company “still faces multiple demand/execution challenges but a liquidity crunch likely isn’t one of them.”
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