Boeing (B.A) reported weaker-than-expected third-quarter earnings results on a new financing deal with a jet supplier. Spirit Aero Systems (S.P.R) weighs its liquidity. But Dow Jones Aerospace reaffirmed 2023 cash flow targets even as it cut 737 Max delivery targets.
Boeing shares fell on Wednesday, hitting new 2023 lows.
Boeing earnings woes
Assessments: Analysts expected Boeing to narrow its net loss sharply to $3.18 a share from $6.18 a year ago, according to FactSet.
Revenue was seen up nearly 13% year-over-year to $18.013 billion, despite some estimates of around $18.3 billion.
Adjusted free cash burn was worse than expected at $310 million.
Boeing already announced Q3 deliveries of 105 business jets and 28 defense jets. Orders for 224 aircraft in September were up from 45 orders in August, reflecting the ongoing recovery in business aviation.
Results: Boeing narrowed its loss to $3.26 a share as revenue rose 13% to $18.1 billion. It was the ninth straight quarter of losses and the third quarter of declining sales gains.
Outlook: Boeing still sees full-year operating cash flow of $4.5 billion-$6.5 billion and free cash flow of $3 billion-$5 billion. Analysts were expecting $4.67 billion and $3.35 billion, respectively.
Boeing also cut its 737 Max delivery forecast amid ongoing production issues.
Shares of Boeing rose as high as 187 at the open, but fell 3.2% to 176.56 in stock market action on Wednesday. Boeing shares are at 11-month lows and below their 10-week and 40-week moving averages, a MarketSmith chart shows. BA stock hasn’t provided a buy point since its last breakout failed in July.
Boeing’s millions to support Spirit
This year, quality defects at fuselage supplier Spirit Aerosystems have limited Boeing’s 737 and 787 programs, which have already suffered during the pandemic. Those problems included improperly drilled holes in the rear fuselage bulkhead of Boeing’s best-selling jet, the 737.
But on Monday, Bernstein analysts cut their price target on Boeing from $274 to $270, while upgrading Spirit shares to outperform.
The company now expects 396 deliveries of the 737 by 2023, Fly said. This is at the low end of the company’s guidance of 400-450 deliveries. Bernstein analysts also noted last week news of a financing deal between Boeing and Spirit Aerosystems.
Boeing will now send $100 million immediately to its troubled suppliers, aiming to stabilize jet production. But analysts at Vertical Research, the most closely watched metric on Wall Street, expect cash to come out of Boeing’s cash flow.
Despite rising orders, Boeing stock has fallen 25% from a 52-week high it set in July, while losing key support levels.
Spirit Aerosystems fired Chief Executive Tom Gentile this month and was replaced by former Boeing executive Pat Shanahan. Earnings must be reported before the market opens on November 1.
SPR shares fell 3.5% on Wednesday. Spirit Aero rose 1% to 22.15 on Tuesday. Shares hit a three-year low of 14.65 last month.
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