Boeing Is Building 737s Faster Than It Has In Years. But …
A faster 737 line, at last
Boeing delivered 171 commercial aircraft in the second quarter — a 14% increase from the 150 a year earlier. And revenue rose 8% year over year to $24.6 billion.
Free cash flow (non-GAAP), meanwhile, swung to a positive $631 million from an outflow of $200 million in the same quarter a year earlier.
Of course, Boeing still does not generate positive net income. Its non-GAAP (adjusted) core loss of $0.76 per narrowed from a loss of $1.24 a year earlier.
The balance sheet also still holds $45.9 billion in consolidated debt — more than double the $20 billion in cash and marketable securities on hand.
Further, Boeing’s order backlog hit a record $715 billion in the quarter, including over 6,200 commercial aircraft. Demand, therefore, is not the constraint. Building and delivering fast enough is. The Federal Aviation Administration limited 737 production to 38 per month in January 2024 ing the door plug accident on a nearly new MAX 9. It raised the limit to 42 last October, approved the move to 47 this past spring, and Boeing began the ramp-up to that pace in the second quarter.
So what would a strike actually halt?
SPEEA members do not assemble aircraft (Boeing’s factory workforce belongs to a different union). The people who just voted are engineers and technical workers, and their vote was overwhelming.
The professional unit rejected the offer with around 64% voting against it, and the technical unit with around 72%. The two units authorized a strike with approximately 88% and 90% support, according to results published by SPEEA.
But their work underpins everything the production increase needs. Engineering supports production, deliveries, and the certification work Boeing expects to finish this year. On that last front, the FAA certified the smallest MAX variant, the 737-7, on Aug. 3 — and Boeing says the larger 737-10 is next.
And Boeing is taking the risk seriously.
“We are now implementing our strike contingency plan and diverting the dollars we had wanted to invest in our SPEEA-represented team to prepare for a potential strike,” said Ben Nimmergut, Boeing’s vice president and functional chief engineer for production engineering, ing the vote.
However, there is a new reason for optimism. Leeham News reported on Thursday that SPEEA and Boeing will meet on Monday to restart talks, after the union spent the week surveying its members on what a better offer needs. Still, not all signs point in that direction: Boeing has posted job openings for replacement engineers and technicians, according to the same outlet.
A deadline, not a strike
No strike can occur while the current contracts remain in effect, and they expire at midnight on Oct. 6. That leaves more than five weeks, and both sides say they want a deal.
But the recent precedent is uncomfortable. In 2024, more than 32,000 Boeing machinists went on strike in September after rejecting a tentative agreement, and the strike lasted more than seven weeks before a much richer contract ended it.
Expand
NYSE: BA
Boeing
Premium Feature
Moneyball Superscore
46/100
Today’s Change
(-0.03%) $-0.07
Current Price
$209.82
Key Data Points
Market Cap
$166BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$207.55 – $210.61
52wk Range
$176.77 – $254.35
Volume
4.6M
Avg Vol
5.8M
Gross Margin
4.71%
And SPEEA’s rejection ed a similar path. The union’s negotiating teams recommended the contracts, but their bargaining unit councils had already declined to endorse them — and members then voted against the agreements by wide margins, citing deep distrust of Boeing’s leadership.
Notably, an engineers’ strike would not ly directly halt the assembly lines as the machinists’ strike did. But I’d say investors shouldn’t find much comfort in that. A walkout would stall the engineering support the production ramp-up depends on, and ly the 737-10 certification work still outstanding, exactly when Boeing is trying to prove it can sustain a pace of 47 per month.
As for the stock, it trades at about $210 as of this writing — around 17% below its 52-week high of $254.35 — and has trended lower over the two weeks surrounding the vote. Even after the drop, the s trade at about 1.74 times sales.
At that valuation, the recovery arguably has to stay on schedule. And the next five weeks at the negotiating table will decide whether it does. Until Oct. 6, the delivery increase and contract talks are the same story.
Read Next
•By Rich Smith
Boeing’s Back in the Defense Business With a Big $131.2 Billion Order for New F-15 Fighters
•By Lee Samaha
•By Brendan Coffey
Boeing vs. Joby Aviation: Which Airplane Manufacturing Stock Promises High-Flying Profits?
•By Daniel Sparks
Boeing Paid $4.7 Billion to Buy Back a Business It Sold in 2005
•By Thomas Niel
Boeing Just Sold 3 Businesses in 1 Week. Here’s What It Says About the Aerospace Giant’s Turnaround.
•By Jack Caporal
Tariff and Trade Investigation Tracker
About the Author
Daniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”
Stocks Mentioned
Boeing
NYSE: BA
$209.82
(-0.03%)-$0.07
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Sumber Artikel:
Fool.com