Fly Intel: What to watch in Boeing's earnings report
Boeing (BA) is scheduled to report results of its fiscal third quarter before the market opens on Wednesday, October 24, with a conference call scheduled for 10:30 am ET. What to watch for: 1. GUIDANCE: When Boeing reported its second quarter results on July 25, the company reaffirmed its FY18 core EPS view of $14.30-$14.50, against consensus estimates of $14.56 at that time, and also raised its FY18 revenue guidance to $97B-$99B from $96B-$98B, against analyst estimates of $98B at that time. 2. AIR CARGO TRAFFIC: On October 16, Boeing projected air cargo operators will need more than 2,600 freighters over the next two decades to keep up with increasing global freight traffic, which is expected to double with 4.2% growth annually. The 980 new medium and large freighters and 1,670 converted freighters will go toward replacing older airplanes and growing the global fleet to meet demand, according to the new World Air Cargo Forecast, released by Boeing at The International Air Cargo Association's Air Cargo Forum and Exhibition. "The air cargo market continues to be a major element of commercial aviation's growth story," said Darren Hulst, managing director of Market Analysis & Sales Support at Boeing Commercial Airplanes. "Our new forecast indicates strong long-term air cargo trends, which coincide with the market recovery that we have seen over the last few years across Europe, North America, and Asia." Some of the factors driving the growth in air cargo include a growing express market in China and the global rise of e-commerce, which is forecast to increase 20% annually to nearly $5T in 2021 according to Boeing's analysis. To meet growing market needs, Boeing also forecasts: The world freighter fleet will expand by more than 70%, from the current total of 1,870 to 3,260 airplanes; Boeing projects new production freighter deliveries valued at $280B; Demand for regional express services in fast-developing economies will boost the standard-body share of the freighter fleet from 37% today to 39%; 1,170 standard body and 500 medium wide-body passenger airplanes will be converted into freighters over the next two decades; Dedicated freighters, which provide unique capability that passenger belly-cargo cannot match, will continue to carry more than 50% of the world's air cargo demand. The majority will be in the large widebody freighter category, such as the 747-8 Freighter and 777 Freighters. 3. DISRUPTIVE COMPUTING AND NETWORKS: On October 17, Boeing announced a new Disruptive Computing and Networks, DC&N, organization to develop computing and communications solutions for advanced commercial and government aerospace applications. By leveraging core technologies in quantum communications and computing, neuromorphic processing and advanced sensing, the new organization will enable Boeing to develop breakthrough solutions in secure communications, artificial intelligence and complex system optimization. In addition to building internal capabilities, DC&N will also work closely with Boeing HorizonX, the company's innovation cell, to identify external partners for collaboration to accelerate growth. "Advanced computing and communications technologies are increasingly at the core of all aerospace innovation," said Greg Hyslop, Boeing's chief technology officer and senior vice president of Engineering, Test & Technology. "We're excited to stand up the Disruptive Computing and Networks organization because it will help us develop new businesses and partnerships in this rapidly-expanding field, delivering more value to our customers and helping further define our second century of aerospace leadership."