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Boeing advances on first profit since 2019 as troubles ease

Julie Johnsson, Bloomberg News on

Published in Business News

Boeing Co. earned a profit for the first time in nearly two years, surprising Wall Street and hinting at a potential turnaround after one of the worst financial crises in the planemaker’s century-long history. The shares jumped.

Adjusted earnings of 40 cents a share weren’t the only sign of progress in the company’s second-quarter earnings report: The manufacturer burned through just $705 million, better than the $2.76 billion outflow that analysts had predicted.

Wednesday’s results suggest that Boeing is starting to emerge from a deep slump caused by the Covid-19 outbreak and the company’s own quality lapses, which were tied to two deadly crashes of its best-selling 737 Max plane. With its business stabilizing, Boeing has halted large-scale job cuts well short of earlier plans to eliminate nearly 20% of its rolls, said Chief Executive Officer Dave Calhoun.

“You will see our efforts gaining traction and our recovery accelerating, as reflected in improved revenue, earnings and cash flow, as well as stabilizing workforce levels,” Calhoun said in a message to employees. Boeing said it plans to hold employment steady at 140,000 jobs, representing a 13% reduction from pre-Covid levels.

Boeing jumped 5.6% to $234.77 at 9:32 a.m. in New York after advancing as much as 6%, the biggest intraday gain in four months. The shares had climbed 3.8% this year through Tuesday, trailing the 15% gain for the Dow Jones Industrial Average.

The surprise second-quarter profit compared with an average loss of 81 cents expected by analysts surveyed by Bloomberg. Revenue rose 44% to $17 billion. Analysts had predicted $16.5 billion.

 

“Today could be seen as a tactical victory for Boeing, but the strategic challenges remain,” said Robert Stallard, an analyst at Vertical Research Partners.

Indeed, the Chicago-based company faces a long road to recovery, and a powerful rival in Airbus SE, which is looking to capitalize on its larger order backlog. Airbus, based in Toulouse, France, is slated to report its results on Thursday.

Another obstacle for Boeing is frayed U.S.-China relations, which have injected uncertainty into the company’s timetable for speeding production of the Max, which is meant to be a cash cow. The model, which was banned worldwide for 20 months, is still barred from flying in its largest overseas market. In the U.S., regulators lifted the grounding in November.

Boeing is also wrestling with manufacturing flaws that have halted deliveries of its 787 Dreamliner aircraft, another key source of cash. The company has temporarily slowed output of the marquee wide-bodies as it searches for and repairs structural imperfections that are about the width of a coat of paint.

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