Boeing Posts Quarterly Loss As Air Travel Halt Dents Sales; Shares Dip

Boeing posted a better-than-feared quarterly loss but warned that its financial performance continues to be significantly dented by the coronavirus pandemic and the grounding of its 737 aircraft. Shares are down 2.7% in morning trading.

Boeing (BA) lost an adjusted $1.39 per share in the third quarter, which was lower than the $2.52 loss per share expected by analysts. Total revenue dropped 29% to $14.14 billion but surpassed the Street consensus of $13.90 billion.

The US aerospace giant said it made steady progress toward the return to service of the 737 MAX aircraft following certification flights conducted by the U.S. Federal Aviation Administration, Transport Canada and the European Union Aviation Safety Agency. The 737 MAX, which has been grounded for more than a year after two fatal crashes, is expected to return to the skies in 2021.

“The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” said Boeing CEO Dave Calhoun. “Our diverse portfolio, including our government services, defense and space programs, continues to provide some stability for us as we adapt and rebuild for the other side of the pandemic.”

Free cash outflow in the third quarter soared to $5.08 billion from $2.89 billion in the year-earlier period. Total debt ballooned to $61 billion during the reported quarter from $19.2 billion last year.

Shares of BA have tanked more than 52% year-to-date as the coronavirus travel restrictions have resulted in a deep cut in the number of commercial jets and services Boeing customers need over the next few years. As such, global airlines suffering billions of dollars in losses have been seeking to cancel or delay some of the orders they have with Boeing, including the 737 MAX. (See BA stock analysis on TipRanks)

In today’s earnings announcement, Boeing said it expects passenger traffic to return to 2019 levels in about 3 years. As a result, the US plane maker Boeing will need to continue with overall staffing cuts through natural attrition as well as voluntary and involuntary workforce reductions.

In a first reaction to the earnings release, Cowen & Co analyst Cai Rumohr reiterated a Hold rating on the stock with a $150 price target (1.2% downside potential), saying that the results are a bit better than estimated due to “lower abnormal MAX costs” but Boeing still has a long way to go.

Rumohr noted that Boeing’s cash outflow was higher than the Street’s $4.9 billion. “Investors apt to be neutral to results,” the analyst wrote in a note to investors.

The rest of the Street has a cautiously Moderate Buy analyst consensus on the stock. That’s with a $188.06 average analyst price target (24% upside potential).

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