United Airlines Order A Boon For Boeing?

United Airlines is an airline based in the United States Aircraft arriving at… [+] Boeing 767-400 ER Extended Range with 2x CF6-80 engines Boeing 767-400 ER Extended Range with 2x CF6-80 engines Boeing 767-400 ER Extended Range with 2x CF The Netherlands’ Amsterdam Schiphol International Airport (AMS EHAM) is located in Amsterdam, the Dutch capital. The plane’s registration number is N66057, and it’s a Boeing 767-424(ER). UAL / UA is an American airline based in Chicago, Illinois that connects Amsterdam to Chicago O’Hare, Houston Intercontinental, Newark, Washington Dulles, and San Francisco on a seasonal basis. (Photo courtesy of NurPhoto/Nicholas Economou via Getty Images)
NurPhoto courtesy of Getty Images
[Updated on June 7, 2021]
United Airlines (NASDAQ: UAL) recently placed a second order for 200 Boeing (NYSE: BA) 737 MAX planes, bolstering optimism for a speedy revival in travel demand and assuaging concerns about the MAX’s manufacturing flaws. Despite a significant increase in passenger numbers at TSA checkpoints, shares of United Airlines and Boeing are still 30% below pre-Covid levels. United Airlines expects significant cash generation, aided by increased passenger demand, in the second half of the year, while Boeing is expected to commence MAX production in the second half of the year. Despite operating cash outflows of $4 billion and $7.5 billion last year (excluding the impact of a $11 billion increase in inventories), both United and Boeing reported positive cash flow in the first quarter (excluding the impact of working capital changes for Boeing), indicating improved operational efficiency combined with the positive impact of government assistance. In an interactive dashboard study, we examine historical patterns in the company’s revenues, margins, and value multiple. Is It True That Boeing’s Stock Has Dropped 26% Since 2018?

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[Updated on March 31, 2021] – Demand for air travel and a Southwest order boost Boeing’s stock.
Boeing (NYSE: BA) and the US Department of Justice reached a $2.5 billion settlement in January, bringing the two-year investigation into the 737 Max program to a close. Boeing must pay a $243 million fine, $500 million in compensation to the families of those killed in MAX crashes, and $1.77 billion to airline customers under the terms of the agreement. Notably, the company’s balance sheet already shows a $5.5 billion short-term obligation attributable to customer concessions. While investors’ recent lawsuit is concerning, the company’s increasing debt is mostly due to high inventory levels. Furthermore, Southwest’s 100-plane order restores faith in MAX following the FAA’s approval. The reduction of Boeing’s 400+ plane inventory is the primary trigger for a big gain in the stock as air travel demand picks up. Our interactive dashboard compares Boeing’s stock performance during the present crisis to that of the 2008 financial crisis.
[3/11/2021] [Updated 3/11/2021] – Will Southwest’s Stock Take Off As A Trigger For Boeing?
Southwest Airlines’ (NYSE: LUV) stock has risen 20% in the last 21 days, regaining its pre-Covid level, thanks to the US government’s second wave of payroll assistance and an increase in passenger counts at TSA checkpoints. Southwest Airlines, for example, is a major Boeing 737 MAX customer, with 380 planes scheduled to be delivered over the next few years. Despite the FAA’s lifting of the restriction in November 2020, Boeing (NYSE: BA) shares are still roughly 30% below pre-Covid levels. While the FAA’s ruling necessitates design adjustments and an overhaul of pilot and crew training programs before the company can safely fly again, the company’s rising debt caused by excessive inventory levels is likely to subside when aircraft are delivered. In an interactive dashboard analysis, Trefis analyses historical stock price trends between Boeing and its major MAX customers. BA After rising 4.3 percent in the previous five days, the stock has a 50% chance of rising in the coming month.
ADDITIONAL INFORMATION FOR YOU
This year, airline stocks have outperformed the overall market, but Boeing has not.
According to a recent Expedia travel forecast, air travel is likely to increase later this year, with the young demographic (Millennials and Gen Z) traveling the most. Southwest Airlines, United Airlines, and American Airlines have all increased their stock prices by 20%, 27%, and 25% in the last 21 days, respectively. Boeing’s stock, on the other hand, has climbed by 12%, 10%, and 4% over the last twenty one days, ten days, and five days, respectively. According to Boeing’s commercial market forecast, worldwide passenger traffic and aircraft fleet will rise by 4% and 3.2 percent yearly over the next twenty years, respectively. Throughout addition, in the future decade, older aircraft replacements will account for about 56 percent of new aircraft deliveries.
Boeing’s debt stems from excessive inventory levels.
Due to piled-up 737 MAX inventory and capital raises to combat any unfavorable pandemic scenario, Boeing’s long-term debt increased from $10 billion in 2018 to $62 billion in 2020. From $62.5 billion in 2018 to $82 billion in 2020, the company’s stockpiles increased by $20 billion. Because the balance sheet has $25 billion in cash and short-term investments, high inventory levels account for a large amount of the long-term debt.
While manufacture of the 737 MAX is set to resume later this year, the 450 planes in the warehouse are intended to service immediate customer demand and produce cash flow. In addition, Boeing’s operating cash outflow in 2020 was only $7.5 billion (excluding the impact of a $11 billion increase in inventories), which is substantially less than the $55 billion decline in the stock’s market valuation. As a result, the resumption of MAX production is the primary catalyst for a significant increase in Boeing shares from current levels.
Is there an alternative to Boeing? The Boeing Stock Comparison With Peers chart shows how BA stacks up against its competitors on key parameters. Peer Comparisons has a lot more of these kinds of valuable comparisons.
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