* Reports Q3 2019 results on Wednesday, October 23 before the open
* Revenue expectation: $ 19.56 billion
* EPS expectation: $ 2.08
For & # 39; the world's largest aircraft manufacturer, Boeing (NYSE :), the worst is by no means over. A flurry of negative news about how the company deals with the faulty 737 Max system makes earnings results less relevant and keeps investors on the brink as global research continues.
Just as investors hoped to resume its 737 Max flights after the global grounding of the model since March 13, the process suddenly became more complicated after the Wall Street Journal unveiled last week that a senior Boeing pilot expressed concern about the 737 Max flight control system three years ago, but the company did not warn federal regulators until 2019.
This narrow-hull aircraft was the space bet's best bet to grow in a tightly fought battle with its competitors, but his journey came to an end this year after two deadly crashes involving the aircraft within the span of five months.
As long as Max remains well-founded, it will be difficult to determine the extent of the damage to the company's reputation and financial prospects. But the stakes are too high for both Boeing and the US economy.
The 737, which first entered service in the late 1960s, is the best-selling model of the aviation industry and the best earner of Boeing. The redesigned Max version was so successful that it attracted more than 5,000 orders worth more than $ 600 billion, including aircraft that have already been delivered. But the commercial return of Boeing's best-selling aircraft has repeatedly slipped and this is unlikely before the beginning of 2020. The delays have cost the aircraft manufacturer at least $ 8.4 billion so far, according to Bloomberg.
Shares Plunge
Boeing shares fell 6.8% to $ 344 at the end of Friday's trading, hurt by the new revelations and the ongoing gap between the company and the Federal Aviation Authority. The decline in Boeing shares was the worst since February 2016 and marked the largest decrease on the
For the future, we do not think that Boeing can achieve full operational normality in the short term – and the main obstacle in this process is to regain public confidence.
Boeing is certainly able to solve the technical problems that are needed to make Max a viable revenue generator again, but that process is also closely linked to regaining public confidence. The allegations last week that Boeing managers may have known about problems with the 737 Max have further damaged that process.
The FAA said last week that all actions related to the original approval of the aircraft are not relevant to the work it is currently performing. Regulators have required Boeing to conduct a new safety analysis of the faulty system and require multiple tests that were not conducted prior to the original jet certification in 2017.
Bottom Line
Boeing shares will recover from this crisis and Max's technical problems will be solved. The next step seems to take responsibility and move on. That can cost Boeing & # 39; s Chief Executive Officer Dennis Muilenburg his work if authorities come to the conclusion that the company has intentionally hidden the information from them. We think that's when BA shares can finally break out of their routine and offer an opportunity to buy.
