As traders begin to settle into the news announcements made over the long weekend, a few stocks are getting a lot of attention. One of them is Boeing (NYSE: BA). The long-struggling aircraft manufacturer said over the weekend that it once again is going to hit a delay with its anticipated 787 Dreamliner. Compounding on top of existing production issues, Boeing’s 787’s is going to be pushed back at least another month, if not further.
It wasn’t the only announcement Boeing made over the weekend, but we’ll get to that in a moment. Boeing said over the weekend that it decided to push back the release of its 787 Dreamliners because it has failed to persuade air safety inspectors that the plane is fully safe. The Federal Aviation Administration (FAA) has been taking a deeper look into the company’s manufacturing issues.
Given that Boeing already has already hit a number of snags with its MAX jetliner as well, it’s not surprising that the company has fallen under such increased scrutiny. Until Boeing can pass these safety inspections, the company is stuck sitting on more than $25 billion worth of airplanes that cant be sold. The average list price for each plane is around $250 million.
In addition to this news surrounding the 787, Boeing’s biggest client outside of the U.S. has officially decided to walk away from a major purchase. Irish airline Ryanair has been one of the biggest MAX 737 buyers in the world, purchasing more than 75 of the aircraft back in 2020, despite the grounding order. However, the Irish airline has now said that it’s walking away from further purchases due to pricing issues.
“Last week it became clear that the pricing gap between the partners could not be closed and accordingly, both sides have agreed to waste no more time on these negotiations,” said Ryanair in an official statement on Monday. The Irish airline has a history of buying planes when they are selling for a discount, especially during major sector downturns, as we saw in 2020.
Shares of Boeing are down around 1.1% in pre-market trading and are likely to keep falling as traders wake up on Tuesday. Despite the bad news, most analysts covering the aviation giant remain cautiously optimistic. Out of the 25 or so analysts covering the stock, 13 of them are bullish. Another ten are neutral, while two are outright bearish on the company.
Boeing Company Profile
Boeing is the world’s largest aerospace and defense firm. With headquarters in Chicago, the firm operates in four segments, commercial airplanes, defense, space & security, global services, and Boeing capital. Boeing’s commercial airplanes segment produces about 60% of sales and two-thirds of operating profit, and it competes with Airbus in the production of aircraft ranging from 130 seats upwards. Boeing’s defense, space & security segment competes with Lockheed, Northrop, and several other firms to create military aircraft and weaponry. The defense segment produces about 25% of sales and 13% of operating profit, respectively. Boeing’s global services segment provides aftermarket servicing to commercial and military aircraft and produces about 15% of sales and 21% of operating profit. – Warrior Trading News
