Boeing (BA, Financial) is experiencing a rise in stock value, up 6.5%, following its Q1 report. Despite posting its 15th consecutive quarterly loss, the loss was narrower than anticipated. Revenue increased by 17.7% year-over-year to $19.50 billion, marking a return to revenue growth after four quarters of decline. This improvement is partly due to the end of the IAM work stoppage in Q4 and the resumption of deliveries.
- The Commercial Airplanes segment led the way with revenue surging 75% year-over-year to $8.15 billion. The segment's operating margin improved to (6.6)% from (24.6)% a year ago, thanks to higher deliveries and enhancements in the quality system. Customers have reported noticeable improvements in quality.
- Boeing is currently producing 737s at a rate of 30+ per month, aiming to increase to 38 per month soon and plans to request an increase to 42 per month with the FAA later this year. The 787 program stabilized production at 5 per month in Q1, with plans to increase to 7 per month this year. The 777X program began expanded FAA certification flight testing in Q1, with first delivery of the 777-9 expected in 2026.
- The Defense segment saw a 9% decline in revenue to $6.30 billion, though operating margin slightly improved to 2.5% from 2.2%. Boeing is witnessing stabilizing operational performance in Defense and secured a key contract in Q1, as the US Air Force selected Boeing to build the F-47, a next-generation fighter aircraft with enhanced range and stealth capabilities.
- Tariffs were discussed, with Boeing noting minimal impact on input costs due to its US-based supply chain. However, some Chinese customers are hesitant to take delivery, prompting Boeing to explore remarketing options. Fortunately, strong demand from other customers allows Boeing to redirect supply.
The Q1 report highlights Boeing's stabilizing business with plans to boost production later this year. The balance sheet has improved following an equity raise in late 2024, and Boeing will sell parts of its Digital Aviation Solutions business to Thoma Bravo for $10.55 billion, focusing more on core operations.
After facing challenges like safety issues, production delays, and the IAM strike, Boeing appointed Robert "Kelly" Ortberg as CEO on August 8, 2024. He has been implementing changes to streamline operations and enhance quality.
