Boeing (BA) is expected to report another tough quarter Wednesday amid the coronavirus pandemic and its 737 Max grounding. Boeing stock fell.




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Estimates: Analysts expect a loss of $2.33 per share vs. a profit of $1.45 per share in the year-ago quarter. Revenue is seen falling 31% to $13.81 billion.

Results: Check back tomorrow. A conference call with CEO Dave Calhoun is scheduled for 10:30 a.m. Wednesday to discuss results.

Boeing reported earlier that Q3 deliveries sank 55% to 28 planes as the 737 Max remains on hold. It has also cut more than 1,000 planes from its backlog this year, and it now stands at 4,325.

Edward Jones analyst Jeff Windau sees some sequential improvement in sales and earnings numbers in Q3 vs. Q2, which saw the height of travel restrictions on air travel. He also expects to see some improvement in cash flow, but free cash flow will still be negative.

“I think many are looking for a reaffirmation of the production rates so if there’s a worsening in the environment and they feel they need to take production rates down further again, that would be a red flag for us.”

Boeing doesn’t expect to increase 737 production to 31 per month until the beginning of 2022, later than a prior estimate of 31 per month in 2021. The company is also slowing widebody output and consolidating 787 production into one plant in South Carolina next year.


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737 Max Weighs On Boeing Stock

Shares fell 3.5% to 155.24 on the stock market today. Boeing stock continues to hit resistance at the 50-day line, while its 200-day line and relative strength line slope downward.

Top 737 Max supplier Spirit AeroSystems (SPR) dipped 0.7% while engine supplier General Electric (GE) lost 3.8%. GE also reports early Wednesday.

The 737 Max has been grounded since March 2019, but Boeing expects the narrow-body jet to get cleared to return to service before the end of the year.

FAA Administrator Steve Dickson said he liked what he saw on his 737 Max test flight in late September. Patrick Ky, executive director of the European Union Aviation Safety Agency, told Bloomberg in October that the agency is reviewing the final documents before it issues an airworthiness directive, likely in November.

Meanwhile, American Airlines (AAL) has added the 737 Max to its flight schedule in late December pending FAA approval. Southwest (LUV) also sees a regulatory OK by year’s end and return to service 3-4 months later.

But Boeing still faces collapsing demand for new planes. Net orders for the 737 Max have plunged below -800 for the year. American and Southwest expect to delay more deliveries, and even Boeing stalwart Southwest will consider an Airbus plane.

Defense, Space Updates

The defense segment has helped prop up Boeing stock as the commercial segment lags. But key Pentagon and space programs have seen delays.

Boeing and NASA are now targeting no earlier than December 2020 for the launch of the second uncrewed test to the International Space Station. The first uncrewed test in December failed to reach the correct orbit and dock with the ISS.

Boeing’s Space Launch System rocket is also facing delays, but the rocket is currently on track for a hot-fire test on Nov. 14. The hot fire is the last of eight tests used to ensure that the core stage of the rocket is ready for launch.

On the defense side, Boeing received yet another charge on its KC-46 tanker program in Q2 and could see another in Q3. The tanker was supposed to have been delivered in September but was delayed due to electrical issues. Over the summer the Air Force announced it would delay a decision on full-rate production for the tanker until the end of fiscal 2024 as Boeing still has technical problems to fix on the plane.

Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more.

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