Boeing (NYSE:BA) lost $1.35 billion in the first quarter, burning through $4.7 billion in the process. On a per-share basis, the company lost $1.70, $0.09 worse than estimates, and revenue came in $400 million below expectations.

But investors knew the quarter would be terrible well before Boeing published its results on Wednesday, April 29. Boeing shares have lost more than half their value year to date as the COVID-19 pandemic has crippled airlines and put aviation expansion plans on hold. Wall Street cheered the results, sending shares up more than 5% after the announcement thanks to Boeing's better-than-expected forecast for future production rates and cash flow.

Is now the time to buy into Boeing shares?

BA Chart

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The quarter could have been worse

Boeing has given investors every reason to worry about the health of the business, eliminating its dividend and lobbying the U.S. government for $60 billion in support for it and its commercial supply chain. The company has already had some high-profile order cancellations, and further cancellations could follow as airlines globally try to avoid bankruptcy filings.

But relative to those worries, the first quarter provided some reasons for hope. The cash burn was actually less than the $5 billion-plus number many analysts were suggesting before the release, and Boeing ended the quarter with $15.5 billion in total cash. It got there in part by drawing down its available credit lines, boosting total debt by 42% from year's end to $38.9 billion, but cash today, debt tomorrow is a pretty sound strategy to employ in the middle of a crisis.

 

Q1 2020

Q1 2019

Revenue

$16.91 billion

$22.92 billion

Non-GAAP operating (loss)/earnings

($1.7 billion)

$1.99 billion

Non-GAAP operating margin

(10.1%)

8.7%

Non-GAAP (loss)/earnings per share

($1.70)

$3.16

Data source: Boeing. GAAP = generally accepted accounting principles.

Boeing delivered only 50 commercial aircraft in the quarter, down 66% from the year prior, and saw commercial revenue fall 48%. But its total company backlog at quarter's end stood at $439 billion, including more than 5,000 commercial aircraft valued at $352 billion.

There was a similar "glass half full" vibe to Boeing's revised production rates. The company is decreasing the number of 787 Dreamliner and 777s it intends to manufacture per month through 2022 and has set a modest goal of manufacturing 31 737 Max jets per month by 2021. But again, those rates are much higher than markets had feared, and it fueled a surge in the shares of Boeing suppliers.

Boeing intends to cut 10% of its 160,000 employees, with a disproportionate amount of the cuts coming from commercial, to help it cut costs and prepare for lower demand.

What does the future hold for Boeing?

The company's forecast for quarters to come was similarly cautious, with no quick end to the current troubles in sight.

"Our industry is going to look very different as a result of this pandemic and the economic impact it has had on airlines and schedules around the world," CEO David Calhoun said on a post-earnings call with investors. "We believe this industry will recover, but it will take two to three years for travel to return to 2019 levels and it will be a few years beyond that for the industry to return to long-term growth trends."

Calhoun said he is "confident" the 737 Max will return to service in the third quarter after being grounded for more than a year, and the company hopes to begin deliveries on the new version of the 777, which has run into development delays, in 2021. If the company is able to get the Max certified and begin deliveries in the second half of 2020, that would go a long way toward stemming the cash bleed, but Boeing said it is still exploring additional options to add liquidity.

Four Boeing 777s in flight.

Image source: Boeing.

Boeing CFO Greg Smith said the company hopes to be cash-flow positive in 2021 and to see cash really ramp in 2022 as some of the airline industry's issues begin to recede. And Calhoun said the rate reductions in the 787 Dreamliner should not be viewed as the beginning of the end for that once celebrated line, predicting demand will rebound along with the economy.

"Our assumptions, and we think we're right, is that the international route structures are going to come back much slower than the domestic ones. And as a result, the 787 suffers," Calhoun said. "But otherwise the airplane's performance, its utilization right now in the marketplace is pretty amazing. So we feel good about the airplane."

Is Boeing a buy?

Boeing had a lot of issues even before the pandemic, and Calhoun and his team have a challenge ahead of them. That said, the first-quarter results and positive tone on the call were a good first step toward Boeing's recovery.

The path from here is clear: Boeing needs to preserve its liquidity in the months to come, and follow through on its plan to get the 450 or so 737 Max planes that have been built, but not yet delivered, out the door and to customers within 12 months of recertification. That would ease the cash drain and allow Boeing to begin normalizing operations.

But although the results are likely enough to slow or even end the sell-off in Boeing shares, its hard to see a catalyst up ahead to get the stock climbing again. The dividend is likely years away from returning, and the current crisis cost Boeing one of the few opportunities it had for now to boost commercial sales.

At best I'm about ready to call a bottom, but there are a lot of stocks and a lot of industries that face a more certain future, and a quicker post-pandemic recovery. Boeing is doing what it has to, but I see no reason to buy into the stock right now.