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Before one gets to the numbers, it is important to note Boeing will not provide 2024 guidance, as it notes the need to focus on “strengthening quality.” Boeing is working closely with FAA on the aftermath of AS1282. Consequently, it makes sense not to offer any 2024 guidance. The FAA capped MAX production by not allowing production expansion.
It is not unreasonable to think the MAX 10 is now the most attractive of the MAX family and that program is being further delayed. Similarly, the MAX 7 which is key for Southwest Airlines. The status of these two models alone is probably good reason to hold off guidance. In 2023, single-aisle deliveries were 64.5% of the total, which underscores the impact of the 737 program for Boeing.
Analyst views reflect caution.
- JP Morgan stating “Overall, we expect an earnings call geared to the lawmakers and regulators who will figure prominently in Boeing’s path forward and less so to the investors whom are somewhat dependent on the actions of these other players.”
- RBC stating: “We can appreciate the fact that Boeing does face substantial uncertainty today regarding the MAX, but we also suspect the company does not want to get in front of the FAA’s ongoing investigation.”
Some top line numbers:
- FY23 Q4 Core EPS -$0.04 (GAAP) above consensus at $-0.73
- FCF at $3Bn during the quarter ($4.4Bn for 2023) on better w/c and advances
- Company 4Q23 core operating margins were 0.4%; Commercial Airplanes posted operating margins of 0.4%. The company posted margins of 17.4% for Services business, while Defense, Space & Security margins were 1.5%
- Defense backlog at $59Bn with defense book to bill at ~1.2x
Boeing 787 is at rate of 5/month and the 737 is at rate of 38/month.
It will interesting to see if analysts on today’s call ask about the amount of compensation Boeing has to pay for for the MAX – Alaska wants $150m for the MAX9 grounding.
How much is Boeing paying Southwest for the delayed MAX 7? The “willing to wait” comment makes sense only if Boeing is compensating the airline for the delays and covering the MRO costs for their aging 700NGs that were meant to retire this year.
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