A British Airways plane comes in to land at Heathrow Airport. The pandemic has devastated demand for plane tickets, hurting makers of jets.
Scott Barbour/Getty ImagesCommercial aerospace giant Boeing closed out an incredibly difficult year with its largest quarterly loss ever. Now investors have to sort through all the charges against earnings to figure out what’s next for the stock.
Boeing (ticker: BA) reported a per share loss of $15.25 on an adjusted basis and a per share loss of $14.65 under generally accepted accounting principles. Sales were $15.3 billion.
Most companies report adjusted and GAAP numbers. The difference, in the case of Boeing, is typically driven by accounting differences between the federal government and GAAP pension accounting standards.
The numbers are surprising. Wall Street was projecting a $2.06 per-share loss on an adjusted basis and a $1.25 per-share loss on an unadjusted basis from $15.2 billion in sales.
What Street didn’t project was a $6.5 billion pretax charge on the 777X program. The 777X is the company’s newest-model 777, a wide-body aircraft that is now due to be delivered in 2023. Before the pandemic, the plane was due to first be delivered this year.
The large headline loss seems to have jarred investors. Boeing stock is down about 3.4% in premarket trading. Dow Jones Industrial Average and S&P 500 futures, however, are down too, by more than 1%.
More important than earnings is cash flow. Boeing burned through another $4 billion in the fourth quarter. That was right in line with analyst projections. For the full year, Boeing used up almost $20 billion.
It was, obviously, a difficult year, marred by the grounding of the 737 MAX jet and the pandemic. Now, though, the MAX is back in action. Wednesday, the European aviation regulators joined some counterparts, including the Federal Aviation Administration, in approving the MAX’s re-entry to commercial service.
The rollout of vaccines has boosted Boeing shares recently. Investors are hoping that immunity to Covid-19 can help return travel patterns to 2019 levels by the end of 2021.
“2020 was a year of profound societal and global disruption which significantly constrained our industry,” said CEO Dave Calhoun in the company’s news release.
The damage can be quantified. Boeing’s $15.3 billion in sales compares to $28.3 billion generated in the fourth quarter of 2018—before the pandemic and the MAX’s grounding. Boeing delivered 59 jets in the fourth quarter of 2020. That compares with 238 jets delivered two years earlier. Boeing’s consolidated debt now totals $63.6 billion, up from $27.3 billion in the fourth quarter of 2018.
The bright spot in the current results was the defence franchise. Sales came in at $6.8 billion, up from $5.9 billion in the year-earlier quarter.
Boeing is hosting a conference call for analysts and investors at 10:30 a.m. Eastern time. Analysts and investors will be eager to hear about the pace of the recovery in air travel, Boeing’s deliveries of commercial aircraft deliveries, and the company’s cash flow.
Write to Al Root at allen.root@dowjones.com
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January 27, 2021 at 08:58PM
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Boeing Caps a Difficult Year With Record Quarterly Loss - Barron's
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