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BOEING UNVEILS SWEEPING PRODUCTION CUTS AMID Q2 LOSS -

29-Jul
20:15 IST

Boeing reported disappointing second quarter earnings Wednesday, registering a larger than expected $2.4 billion loss with the coronavirus pandemic hitting the airline, which was already beset with problems of its own making.

Boeing stock traded 1.8% higher in pre-market. Boeing shares are down 47% from the beginning of the year. 

Boeing announced a loss per share of $4.79 on revenue of $11.81 billion, resulting in a net loss of $2.4 billion. Its operating cash burn was $5.3 billion in the quarter, primarily reflecting lower commercial deliveries and services volume due to Covid-19 and the grounding of its best-selling plane, the 737 Max, since March 2019 following two fatal crashes. 

Boeing’s net loss narrowed to $2.40 billion, or $4.20 per share, from $2.94 billion, or $5.21 per share, a year earlier, when it posted a nearly $5 billion charge on its beleaguered 737 Max program.

Boeing’s commercial aircraft unit suffered the most, with a 65% drop in revenue from a year earlier as deliveries of new planes tumbled.

CEO Dave Calhoun announced the production cuts after the company released a $2.4 billion quarterly loss. 

The company said it resumed 737 program early stages of production in May and it expects to gradually increase the production rate to 31 per month by the beginning of 2022, with further gradual increases to correspond with market demand. The company took a 737 MAX customer consideration charge of $551 million in the quarter, compared with a $5.6 billion charge in the same period last year. 

It added that the production rate for its 787 model will be reduced to six per month in 2021, while the 777/777X combined production rate will be gradually reduced to 2 per month in 2021, with 777X first delivery targeted for 2022. 

Boeing Co slashed production on its widebody programs, delayed the arrival of its newest jet, and confirmed the demise of its iconic 747, as it reported a bigger-than-expected quarterly loss on Wednesday amid fallout from the COVID-19 pandemic. 

Boeing said Wednesday it plans to cut aircraft production and warned about the possibility of further reductions in its workforce as the impact of the coronavirus pandemic ravages demand for air travel.

Weaker demand prompted Boeing earlier this year to announce a planned workforce cut of 10% of its 160,000-person staff, through buyout packages and involuntary cuts. 

On the technical front, the RSI is at 41.02% and suggests that the market can move in an upward direction. The current price is trading below all the moving averages. The stochastic is forming an upside crossover.

Overall Bias is Positive and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

Trade Suggestion—BOEING—BUY at $165.00 Take Profit at $175.50 Stop Loss at $157.00

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