Boeing Might Be Bouncing Back

Boeing Might Be Bouncing Back
Paul Allison, CFA

7 months ago2 mins

What’s going on here?

Planemaker Boeing released a results update on Wednesday – and it sounds a bit like a bounceback.

What does this mean?

Every airline knows that flying planes can be tricky in the post-Covid world, but making the things is no picnic either. 2018 was the last full year Boeing spent in the black, after all – but now the company's quarterly results suggest it might be regaining its cruising altitude. The behemoth’s first-quarter revenue leaped 28% compared to last year, helping to trim losses more than expected. And Boeing’s captain says it’s sticking to that trajectory: the firm’s boosting production of its once-troubled 737 Max planes, and banking on positive cash flow for the whole of 2023. Those are reassuring words in turbulent times – so it’s no surprise that the stock initially popped when the news broke.

Boeing deliveries

Why should I care?

Zooming in: Dividends waiting in the wings.

Investing in new planes saw Boeing burn through cash like jet fuel for many years. And just when those moves were starting to pay off, along came Covid – bringing the firm back down to Earth and forcing it to take on $40 billion in debt. So, sure, Boeing’s optimistic about its future cash flow, but debt repayment has priority boarding – and that means investors could be waiting quite a while before any dividends come their way.

Boeing losses narrow

For markets: UPS said “oops”.

Parcel deliverer UPS – which boasts around 200 Boeing jets in its fleet – shares more than just a love of aircraft with the planemaker: both companies also serve as early warning systems for economic turbulence. So while Boeing’s results might come as a relief, it’s worth keeping an eye on UPS too: last quarter the firm saw a steeper-than-anticipated 5.4% yearly drop in US parcels, prompting investors to send the stock down 10%. Let’s just hope that’s nothing more than an air pocket.



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