Boeing Co earned a profit for the first time in nearly two years, surprising Wall Street and hinting at a budding turnaround after one of the worst financial crises in the planemaker’s century-long history. The shares jumped.
Adjusted earnings of 40 cents a share weren’t the only sign of progress in the company’s second-quarter financial results.
In addition, the manufacturer burned through just $705 million in cash, better than the
$2.76 billion outflow that analysts had predicted.
The results suggest that Boeing is starting to emerge from a deep slump caused by the Covid-19 pandemic and the company’s own quality lapses, which were tied to two deadly crashes of its best-selling 737 Max plane.
With its business stabilising, Boeing has halted large-scale job cuts well short of earlier plans to eliminate nearly 20% of its payroll as it gears up for a production increase over the next few years.
“We are turning a corner and the recovery is gaining momentum,”Chief Executive Officer Dave Calhoun said on an earnings call. “I’ve said before that we view this year as a critical inflection point, and it’s providing to be just that.”
Boeing jumped 4.5% to $232.20 in New York after advancing as much as 6.8%, the biggest intraday gain in four months. The shares had climbed 3.8% this year through Tuesday, trailing the 15% gain for the Dow Jones Industrial Average.
The company plans to hold employment steady at 140,000 jobs, representing a 13% reduction from pre-Covid levels, as its finances recover. The surprise second-quarter profit compared with an average loss of 81 cents expected by analysts surveyed by Bloomberg. Revenue rose 44% to $17 billion. Analysts had predicted $16.5 billion.
“Today could be seen as a tactical victory for Boeing, but the strategic challenges remain,” said Robert Stallard, an analyst at Vertical Research Partners.
Indeed, the Chicago-based company faces a long road ahead. The Max is still banned from the skies in China, its biggest foreign market, eight months after US regulators allowed flights to resume. Boeing is also wrestling with manufacturing flaws that have halted deliveries of its 787 Dreamliner, another key source of cash.
Meanwhile, Boeing faces a powerful rival in Airbus SE, which is looking to capitalise on its larger order backlog. The European planemaker reported its results last week.
But Boeing is advancing on key fronts, Calhoun said. The company is making progress in discussions with regulators in China and expects the 737 Max grounding to be lifted there and in other hold-out nations this year, he said.
The company has largely resolved technical issues raised by China’s aviation authority, Calhoun said. And while the US and China are deadlocked on trade talks, they don’t need a bilateral agreement for mutually beneficial areas such as Max deals. Boeing is counting on Chinese orders to help fill its production schedule, while the country’s airlines need the Max to handle an influx of travelers with next year’s Winter Olympics.