Boeing's (BA 1.09%) shares fell by 13% in April, according to data provided by S&P Global Market Intelligence. The move adds to a miserable year for the company, with the stock down slightly more than 31% in the year to date.
Boeing in 2024
It comes as a result of a disappointing performance in the quarter, especially in terms of airplane deliveries. Boeing released its first-quarter delivery data on April 8. It reported:
- 67 deliveries of Boeing 737 airplanes
- 3 deliveries of Boeing 767 airplanes
- 13 deliveries of Boeing 787 airplanes
To put these figures into context, on its Investor Day presentation in November 2022, management said it would deliver 400 to 450 Boeing 737s and 70 to 80 Boeing 787s in 2023. These figures imply a quarterly run rate of up to 113 on the 737 and 20 on the 787. Boeing is nowhere near those rates at the moment.
Investors are entitled to ask how the company is going to get to the rate of 50 a month on the 737 and 10 a month on the 787 in 2025-2026 -- assumptions critical to Boeing hitting its target of $10 billion in free cash flow (FCF) in that time frame. As a reminder, the company is falling behind its delivery targets due to manufacturing quality issues that have dogged it in recent years.
Boeing's earnings did little to dispel fears
As discussed previously, Boeing's earnings didn't give investors much confidence in its progress toward hitting its FCF target.
Ramping up commercial airplane production is difficult at the best of times. In addition, while Boeing's possible acquisition of Spirit AeroSystems (a supplier of fuselages on the 737) might reassure investors of the financial security of one of its key suppliers, it also implies Boeing will take on a company that's bled cash in recent years.
There's also the issue of an upcoming negotiation with the International Association of Machinists and Aerospace Workers (IAM) over a contract that needs to be renewed in September.
Image source: Getty Images.
The bigger picture for Boeing
Looking beyond the medium term, Boeing needs to be in an excellent position to ensure it keeps winning airplane orders. Delivery delays may push customers into the arms of Airbus. There's also the issue that, according to The Wall Street Journal, Brazil's Embraer is looking to muscle in on the Boeing 737/Airbus A320 market by developing a competing plane. Embraer is, no doubt, watching Boeing's troubles with great interest.
