Boeing's Key to Escaping Earnings Shock Slump: "Normalization of Aircraft Delivery Delays"

[Asia Economy Reporter Ji-hwan Park] Boeing recorded an earnings shock in the fourth quarter of last year, significantly missing market expectations. The securities industry forecasted that the key to normalizing earnings is the normalization of aircraft delivery delays, they said.

According to Kiwoom Securities on the 1st, Boeing's revenue in the fourth quarter of last year was $14.8 billion, down 3.3% compared to the same period last year. It decreased by 3.2% compared to the previous quarter. In particular, operating loss recorded $4.54 billion, marking an earnings shock that significantly missed market expectations.

Jisung Jin, a researcher at Kiwoom Securities, said, "This is due to $3.5 billion in costs related to managing delays in 787 deliveries and $400 million in costs related to the KC-46A tanker."

There is an analysis that expanding aircraft deliveries is necessary for earnings recovery. In particular, resuming deliveries of the 787 model is considered urgent. The expansion of resumed deliveries of the 737 MAX aircraft and the expected imminent approval of operations by Chinese regulatory authorities are seen as positive. However, there is still an opinion that expanding aircraft deliveries is necessary as the inventory of completed aircraft held stands at around 335 units.

Researcher Jisung Jin said, "In the case of the 787 program, which is the biggest problem for earnings, an additional $2 billion in costs will occur by 2023," adding, "Substantial earnings improvement is expected to appear in the second half of this year after the expansion of 737 MAX deliveries to China and the FAA's approval to resume deliveries of the 787 MAX model."