Boeing Co (NYSE:BA) reported profit for the first time in six quarters, thanks to the travel industry comeback and the increased deliveries of its best-selling 737 MAX aircraft.
Q2 2021 hedge fund letters, conferences and more
Travel Industry Comeback
The overall spread in global COVID-19 vaccinations is seen as the macro driver behind the company’s encouraging second-quarter results. As informed by Reuters, “The 737 MAX is integral to Boeing's financial recovery, as the U.S. planemaker scrambles to recoup billions of dollars in lost sales from the pandemic.”
Boeing bounced from a net loss of $2.96 billion in the second quarter last year, to hit a profit of $567 million this time. Upon the announcement on Wednesday, Boeing shares were up 3.8% in premarket trading.
As informed by CNBC, “Boeing’s revenue rose 44% to nearly $17 billion from $11.8 billion a year earlier, beating analyst estimates of $16.54 billion.”
CEO David Calhoun said the company is aiming at stabilizing their staffing levels to around 140,000 employees, after earlier planning for a total of 130,000 by the end of this year.
Calhoun said: “While our commercial market environment is improving, we're closely monitoring COVID-19 case rates, vaccine distribution, and global trade as key indicators for our industry's stability.”
He also asserted that going forward, the company would keep tabs on infection rates, vaccine roll-outs, travel protocols, and global trade as main indicators for recovery.
737 MAX Orders
The 737 MAX model was the workhorse that pulled Boeing back Boeing from some of its darkest days, as sales and deliveries of the once faulty aircraft rose in recent months.
In June, United Airlines Holdings Inc (NASDAQ:UAL) announced the largest plane order in its entire history, comprising of 200 units of the 737 MAX and 70 Airbus 321neo. Southwest Airlines Co (NYSE:LUV) ordered 34 the same month.
With this money in the bag, Boeing’s revenue in its commercial airplane unit “rose nearly 270% from a year earlier to $6.02 billion in the second quarter. But the segment still reported negative margins of 7.8%.”
Boeing’s financial results also come despite airworthiness issues with the 777X. In late June, the F.A.A declared the aircraft unfit to fly as it needed to take further certification steps derailing the plan to launch it until mid-to-late 2023.
Also, the 787 Dreamliner delivery forecast has been adjusted, as Boeing said it would hold off handovers to airlines for a second time in less than six months, after discovering additional manufacturing defects on the planes.
