On the eve of the announcement, Boeing's share price was down 7% year-on-year and 11% over the last month alone. Several negative signals added to the gloomy mood: China suspended orders for aircraft and parts amid a trade standoff. Three aircraft destined for a Chinese airline were even repatriated.
At the end of March, Boeing had 130 aircraft on order from Chinese customers, including airlines and leasing companies, according to data published on its website. However, some buyers prefer to remain anonymous, which could inflate this figure.
Bank of America analysts estimate that a "large portion" of the 668 aircraft ordered by unidentified customers could actually come from China. This is a sign that, despite trade tensions and the official suspension of some orders, Chinese demand remains strong, albeit discreet.
Another problem is persistent difficulties in the supply chain, which are slowing down the ramp-up of production despite booming demand.
Strategic decisions welcomed
The sale of the "Digital Aviation Solutions" business, including the Jeppesen navigation unit, to private equity firm Thoma Bravo for $10.55bn had a calming effect on the markets. Kelly Ortberg presented the sale as a way to refocus on core businesses and strengthen the company's credit rating. The market welcomed the move, with its shares rising 2% even before the quarterly results were released.
The company also retains its investment grade ratings from the three main agencies: S&P: BBB-; Moody's: Baa3; and Fitch: BBB-.
Selling assets is never a good sign in itself, although efforts to reduce debt appear to be paying off.
Better-than-expected figures
Revenue climbed 17.5% to $19.5bn. EPS came in at -$0.49, well above the -$1.13 expected. In terms of deliveries, Boeing delivered 130 airliners in the quarter, compared with 83 a year earlier. This is a strong recovery after a difficult end to 2024, which was marked by a major strike involving almost 40,000 employees over 50 days and quality issues.
Segment by segment: recovery underway
Commercial aircraft: the engine of recovery
This is the group's mainstay and the main reason for optimism. Boeing plans to increase the production rate of its two flagship models, the 737 and 787, with a target of 38 and 7 aircraft per month respectively for the time being. Production of the 737 had been slowed down by the FAA (Federal Aviation Administration) due to several incidents. According to CNBC, the group will take steps to request an increase to 42 per month.
The order book remains massive: $460bn, or 5,600 aircraft.
Defense, space, and security: lower revenues, but promising projects
This segment saw a 9% decline in revenue. However, Boeing has been selected to build the F-47, a new-generation fighter jet for the US Air Force. Another announcement was the start of assembly of the first aerial refueling drone, with tests planned for this year.
Global services: stability and visibility
In line with the other segments, the global services division posted solid performance.
The latter two divisions maintain a solid order book, which points to strong future revenues. $62bn for defense, space and security (the order for the US Air Force has not yet been booked) and $22bn for global services.
Progress on troubled programs
Some lagging projects appear to be picking up steam. The large aircraft program, originally expected in 2020, has reached a key milestone toward certification. The 737 Max 10 has completed a phase of test flights ahead of certification (market entry was planned for 2023).
Boeing is showing resilience amid turbulence. The company last posted a profit in mid-2021, and its management has been reshuffled after a series of problems relating to aircraft quality and safety. Signs of recovery are beginning to emerge: losses are down, production is up, and the rhetoric is reassuring. However, Boeing is not out of the woods yet.
