Boeing (BA) is scheduled to report results of its fiscal first quarter before the market opens on Wednesday, April 24, with a conference call scheduled for 10:30 am ET. What to watch for:
1. GUIDANCE: When Boeing reported its fiscal fourth quarter results on January 30, the company provided FY19 core EPS view of $19.90-$20.10, against consensus estimates of $18.31, at that time. The company also provided FY19 revenue guidance of $109.5B-$111.5B, against analyst expectations of $106.8B, at that time. The company also saw FY19 commercial airplane deliveries of 895-905, though on March 13, Reuters reported that deliveries of Boeing's 737 MAX planes are "effectively frozen." During the Q4 earnings conference call on January 30, Boeing said it sees Q1 as the lowest quarter of the year for revenue.
2. 737 MAX AIRCRAFT: On March 10, a Boeing 737 Max operated by Ethiopian Airlines crashed shortly after leaving Addis Ababa en route to Nairobi, Kenya, killing all 157 passengers on board. The Boeing 737 Max was the same plane operated by Lion Air that went down off the coast of Indonesia on October 29, 2018. On March 11, foreign countries began grounding the aircraft with the U.S. following suit on March 13. On March 15, AFP news agency tweeted: "#BREAKING Boeing to roll out software upgrade for 737 MAX stall prevention in 10 days: source" According to Reuters, Boeing said its software upgrade for the 737 MAX will be rolled out "in the coming weeks" and that this "timeline has not changed." Also on March 15, New York Times reporters Thomas Kaplan and James Glanz wrote that investigators of the Ethiopian Airlines' Boeing 737 Max 8 jet crash last weekend discovered evidence that potentially links the disaster to the Lion Air crash in October. The investigators uncovered that the stabilizers of the aircraft in the most recent crash were tilted upward, which would have forced the nose of the jet down. This was also reported to be the case in the October crash, the reporters state, suggesting that both aircraft may have had glitches with the automated system aimed to prevent a stall. On March 18, Boeing CEO Dennis Muilenburg stated the following in a letter: "Work is progressing thoroughly and rapidly to learn more about the Ethiopian Airlines accident and understand the information from the airplane's cockpit voice and flight data recorders. Our team is on-site with investigators to support the investigation and provide technical expertise. The Ethiopia Accident Investigation Bureau will determine when and how it's appropriate to release additional details." On March 19, U.S. Department of Transportation confirmed Secretary Elaine Chao asked that, as part of an ongoing review of factors related to aviation certification, the Inspector General conduct a formal audit of the certification process for the Boeing 737-MAX 8 aircraft. On March 20, The Seattle Times' Steve Miletich reported, citing people familiar with the matter, that the FBI has joined the criminal investigation being conducted by the U.S. Department of Transportation into the certification of the 737 MAX. On April 5, Boeing confirmed the crashes were linked by failed MCAS function, that it is working to fix the issue, and that it is cutting production of the aircraft to 42 airplanes per month from 52 per month.
3. STRATEGIC PARTNERSHIP WITH EMBRAER: On February 26, Boeing and Embraer (ERJ) announced the proposed strategic partnership between Boeing and Embrae was approved by Embraer's shareholders. Shareholders approved the proposal that will establish a joint venture made up of the commercial aircraft and services operations of Embraer. Boeing will hold an 80% ownership stake in the new company, and Embraer will hold the remaining 20%. The transaction values 100% of Embraer's commercial aircraft operations at $5.26B, and contemplates a value of $4.2B for Boeing's 80% ownership stake in the joint venture. Embraer shareholders also agreed to a joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Under the terms of this proposed partnership, Embraer will own a 51% stake in the joint venture, with Boeing owning the remaining 49%.