Boeing is seeking to hire up to 160 pilots to bring its 737 MAX aircarf back to the skies following a 20-month safety ban, Reuters has learnt.
According to the report, Boeing (BA) is ready with investment plans worth $1 billion towards the employment, training, and development of a flight deck for the next generation of pilots. The aerospace company is working on a safe relaunch of the 737 MAX, after facing costs of $20 billion over the grounding of the aircraft.
“The unusual hiring spree is part of a Boeing campaign to protect the re-launch of its redesigned 737 MAX from operational glitches and rebuild trust following crashes in Indonesia and Ethiopia that killed a total of 346 people.” according to the Reuters report.
“We continue to work closely with global regulators and customers to safely return the 737-8 and 737-9 to service worldwide,” a Boeing spokeswoman told Reuters.
Boeing’s stock price has lost 31% YTD and is trading at a discount of 36% to its 52-week high. (See BA stock analysis on TipRanks)
This week, Morgan Stanley analyst Kristine Liwag reiterated a Sell rating on the stock with a price target of $165, which implies that investors could be losing 27% over the coming 12 months.
Liwag expects Boeing to launch an equity issue of between $20 billion and $30 billion leading to a 15-20% dilution following the company’s CFO Greg Smith’s comment on Dec. 4, “we’ll look for every opportunity to [get this debt balance down] in the most efficient way, including equity.”
According to the analyst, Boeing faces multiple headwinds including an unpaid debt burden of $61 billion, operating risks connected to the 737 MAX, weak demand for new aircraft, competition from Airbus, and the likely launch of a new aircraft.
“In our view, without an equity raise, the company’s debt burden would limit the company’s strategic moves in order to protect its market share and/or invest for the next capex cycle,” Liwag wrote in a note to investors.
From the rest of the Street, the stock scores a cautiously optimistic Moderate Buy analyst consensus based on 9 Buys, 8 Holds, and 2 Sells. The average price target of $223.19 implies downside potential of 1.2% to current levels.
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