Boeing (BA) Reports Staggering Q4 Loss

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Dow component The Boeing Company (BA) is trading lower by more than 3% in Wednesday’s pre-market session after reporting a staggering fourth quarter 2020 loss of $15.25 per share, much worse than $1.63 loss estimates. Revenue fell 14.6% year over year to $15.39 billion, matching modest expectations. The company cited COVID-19 and 787 production issues for the shortfall but delivered over 40 MAX-737 jetliners and returned another five to its fleets.

Key Takeaways

  • Boeing reported a much greater-than-expected quarterly loss of $15.25 per share.
  • The stock is trading below $200 for the first time since November.
  • The aerospace giant pushed delivery dates toward 2023 and beyond.
  • Delivery projections may be too optimistic due to huge supply issues.

Commercial airline revenue fell 37% year over year, rising 31% compared to the third quarter. The 737-MAX program is expected to deliver 31 jetliners per month in 2022, when 787 production rises to just five per month. The company pushed back 777x deliveries to late 2023, but all projections are suspect because Boeing has done a poor job predicting demand since the Ethiopian jetliner crash in 2019.

The MAX-737 jetliner returned to the skies in the fourth quarter, but there’s little demand for the aircraft, with severe travel restrictions around the world. In addition, the pandemic has forced carriers to mothball hundreds of aircraft, generating a massive supply that will lower demand for new planes well into the future. Adding to long-term concerns, many analysts now believe that business travel will never return to pre-pandemic levels because corporations have adapted to the virtual meeting space, saving billions in travel budgets.

Wall Street consensus on Boeing hasn’t improved in the past three months despite positive 737-MAX developments, with a “Hold” rating based upon 10 “Buy,” 1 “Overweight,” 11 “Hold,” 2 “Underweight,” and 3 “Sell” recommendations. Price targets currently range from a low of $150 to a Street-high $306, while the stock will open Wednesday’s session nearly $30 below the median $222 target. There’s room for a little upside with this placement, but the huge quarterly loss won’t stir buying interest.

Tip

Demand is an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease the quantity demanded, and vice versa. Market demand is the total quantity demanded across all consumers in a market for a given good.

Boeing Weekly Chart (2013 – 2021) 

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The stock returned to the 2007 high at $107.83 in 2013 and broke out, entering a broad trading range on top of new support. It held within those boundaries into a secondary breakout in 2017, with committed buyers generating impressive returns into March 2019’s all-time high at $446.01. A second MAX crash then triggered a worldwide grounding, sending price into a tailspin that initially found support near $320 in the third quarter.

Boeing broke range support in February 2020, plunging to a seven-year low in the double digits, and bounced back above $200 in June. A multi-month consolidation carved a higher November low, yielding a strong buying impulse that mounted second quarter resistance before fizzling out below the 200-week exponential moving average (EMA) in December. The stock has been pulling back since that time and is trading below $200 for the first time since November.

The monthly stochastic oscillator is grinding through a buy cycle, while the weekly indicator’s sell cycle has crossed into oversold territory. Taken together, this downswing is likely to bottom out quickly, allowing bottom fishers to take exposure at cheaper prices. Even so, the November gap between $158 and $172 remains unfilled, potentially acting as a magnetic target when investors realize that the old Boeing may be gone for good.

Tip

A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. It is used to generate overbought and oversold trading signals, utilizing a 0–100 bounded range of values.

The Bottom Line 

Boeing is selling off after posting a much worse-than-expected fourth quarter loss and announcing delays in key milestone dates. 

Disclosure: The author held no positions in the aforementioned securities at the time of
publication.

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Hawaiian Airlines posts Q4 loss as travel restrictions remain | News

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Hawaiian Airlines reported a fourth-quarter loss of $172.8 million as the ongoing global coronavirus crisis and ensuing strict travel restrictions in its home state continue to create hardship for the business.

The Honolulu-based carrier’s full-year loss came in at $551 million, compared to a profit of $218.9 million in 2019.

Revenue in the quarter was just under $150 million, down 79% from the same quarter in 2019. For the full year 2020, the airline reported $845 million in revenue. That’s 70% lower than the year before.

Hawaiian A321neo

“While 2020 has been the most challenging year the airline industry has experienced, we are encouraged that the re-opening of Hawaii to tourism through the state’s pre-travel testing program and Hawaiian’s successful testing partnerships have allowed us to begin the journey to recovery,” says Hawaiian’s chief executive Peter Ingram.

“The negative impacts of Covid-19 will create a challenging beginning of 2021, but we are confident that the structural pieces are in place for a sustained recovery,” he adds.

He says the company doubled its capacity in the fourth quarter of 2020 compared to the third quarter, but it remains down 72% compared to the same period in 2019.

The airline seems to have reached what Ingram calls its “inflection point” in October, when the state of Hawaii introduced an opt-out programme for the state’s mandatory 14-day quarantine. Those arriving in the islands in the middle of the Pacific Ocean have the ability to bypass the self-isolation requirement if they bring proof of a negative coronavirus test result that is no older than 72h.

The popular tourist island of Kauai in the western part of the state continues to be an exception. It re-instated its own quarantine requirement for visitors and returning residents in December. So Hawaiian has also rolled back capacity to the island’s main city Lihue, says senior vice-president of revenue management and network planning, Brent Overbeek.

Ingram adds that the airline’s recovery will depend on a successful vaccination roll-out on the US mainland, and the carrier will adjust its capacity accordingly if and when customers return. 

“Where we really project demand picking up further will track along with the pace of vaccination delivery,” he says. “The more vaccinations that can be delivered, the better that is for demand for Hawaii and demand in general.”

While the opt-out programme has brought more passengers from the US and enabled the airline to restart flights to all of its pre-pandemic cities on the mainland, as well as some connections to and from Japan, the carrier’s biggest non-US market, travel within the islands remained depressed.

The problem, executives say, is that the test’s high costs as compared to the inter-island flight ticket make it difficult to justify travel.

For the first three months of the year, Hawaiian sees much of the same as during the last quarter of 2020. “A lot can change at this point, but we don’t expect a material improvement in revenue compared to the fourth quarter,” Overbeek says. Overall, the airline expects its first quarter 2021 capacity to be about half of that flown during the first quarter of 2019, as the state keeps its pre-departure testing programme in place throughout the period.

On international routes, Overbeek adds that the airline expects to operate about 20% of 2019 levels, and has no plans to resume its service to Australia and new Zealand until “at least the third quarter”.

787 DELIVERY SCHEDULE

In mid-2020, Hawaiian reached a deal with Boeing to push back delivery of its first long-awaited Boeing 787 Dreamliner aircraft by about a year. Originally, the company had expected to take delivery of the first of 10 ordered aircraft beginning in late 2021. That has now been pushed back to September 2022, and the start of revenue service with the type will be in 2023, executives say. Further deliveries will continue on into 2026.

“We did not push back the early ones and then bunch everything up,” Ingram says. “We shifted the entire delivery stream, so we have the original cadence and balance from the time when we start taking deliveries.”

The Boeing 787s were part of an ambitious strategy to expand further in Asia, and even possibly bring a European destination into the carrier’s network in the mid-term. Those plans are on hold, however, as the coronavirus continues to disrupt the entire industry.

Currently, Hawaiian operates Airbus A330-200s on long-haul routes to Asia, as well as to Boston and New York City, which are two of the longest domestic flights in the world.

 

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Aces basketball looks to rebound from loss, travels to face Bradley

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”I think our guys will approach it well,” Lickliter said. “I think they’ll compete hard and prepare well, but you have to execute on game day. And you know, the challenge – Bradley presents a lot of challenges, so we’re still growing. We still don’t have a lot of experience, but we’re gaining every day.”

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