Boeing shares skyrocket on earnings and aircraft forecasts

By Ankit Ajmera and Eric M. Johnson

(Reuters) – Boeing (NYSE: Co) shares climbed on Wednesday as the world's largest planner raised expectations for earnings and cash flow for 2019 in a rapidly expanding air travel environment stating that he had overcome the delays of suppliers who had blocked the production of 737 last year.

Boeing, based in Chicago, has announced its intention to deliver between 895 and 905 commercial aircraft in 2019, compared with 806 aircraft delivered last year, which – although just below the target – is the only way it can be delivered. placed in front of his competitor Airbus SE for the seventh year.

Investors are closely monitoring the number of aircraft that Boeing sells to airlines and leasing companies over the course of a year to get a sense of the company's cash flow and revenues.

Despite its optimistic outlook, the major US exporter is expected to face potential turbulence on several fronts in 2019, including the financial strains felt by some of its airline customers, signs of a more downturn in the economy. general and trade tensions between the United States and China, where Boeing carries 1 out of 4 aircraft that does.

There are also unanswered questions related to the deadly crash of a Lion Air 737 MAX in Indonesia, in October, which shone the spotlight on the latest version of the best-selling jet, as well as on training and maintenance airlines.

Boeing shares rose 5.9% to $ 386.12 early in the session, becoming the biggest gain in the market.

Boeing has increased its earnings per share guidance for the full year in progress, from $ 14.90 to $ 15.10 to $ 19.90 to $ 20.10, and Businesses range from $ 109.5 billion to $ 111.5 billion, from $ 98 billion to $ 100 billion, fueled by a significant volume of commercial, military and service activities. companies.

Boeing said its quarterly operating margin on commercial aircraft increased from 11.6% to 15.6% over last year, thanks to increased production of 737 units and more margins. raised on its 787 Dreamliner jumbo.

Vertical Research Partners badyst Robert Stallard said Boeing was "squeezing" its margins, he expects investors, who have reacted favorably to the 2019 forecast, to focus again. on cash flow.

"With the 4Q a little light, despite lower than expected investments, and an" online "forecast for 2019, we will be interested to see if an investor considers this to be enough," wrote Stallard.

WAITING FOR NEW JET DECISION

Managing Director, Dennis Muilenburg, said the company's performance provided a "solid platform" to invest more in new innovations as the aviation industry awaits a decision in 2019 on Boeing's decision to 39 go ahead with a new medium sized plane dubbed NMA.

He also said that the all-new 777X full-throttle jet aircraft was scrapped and powered up, and that the program was on track for flight testing this year and its first delivery in 2020.

The company was forecasting operating cash flow of between $ 17 billion and $ 17.5 billion in 2019, compared to $ 15.32 billion in 2018 and above the average estimate of $ 16.73 billion in cash and cash equivalents. badysts, according to IBES data from Refinitiv.

It forecasts a profit of 2019 between 19.90 USD and 20.10 USD per share and a turnover of between 109.5 and 111.5 billion USD.

These figures indicate that Boeing has largely overcome delays in obtaining fuselages and engines from its bestselling 737 narrow body, which has hampered production over the past year. Nevertheless, production bottlenecks resulted in a quarterly free cash flow of less than $ 2.45 billion, lower than the previous year.

Boeing's main earnings reached $ 5.48 per share in the fourth quarter, up from $ 5.07 a year ago, and exceeds the estimate of $ 4.57 per Wall Street share.

The quarterly turnover rose 14.4% to $ 28.34 billion, above the average expectations of badysts, which stood at $ 26.87 billion. The Boeing business figure for 2018 has surpbaded the $ 100 billion mark for the first time in 102 years of existence.