Boeing aircraft deliveries are recovering. Is it time to buy stocks?
Boeing (BA) is gradually recovering from a double crisis: the almost two-year grounding of the most cost-effective commercial 737 Max aircraft and the COVID-19 pandemic.
However, this growth does not seem to impress investors yet, who want more actual sales rates, industry recovery, and Boeing’s return to paying dividends and repurchasing shares that the company has suspended to preserve capital. As a result, Boeing shares are trading 8.7% lower than at the beginning of 2021 and are down 11.5% month.
On Tuesday, the aviation industry giant announced that it delivered 34 aircraft in November. 28 were narrow-body passenger 737 MAX.
Other Boeing models delivered last month include the 737-800A, 767-2C, and 767-300F. As a result, from the beginning of 2021 to November, the total number of Boeing deliveries reached 320 aircraft, 213 units – 737 Max. In addition, during this period, the company received new orders for 829 units.
For comparison, in October, the number of deliveries of Boeing aircraft amounted to 27 aircraft, and in November of the crisis year 2020: 7 units.
In November 2019, Boeing delivered 24 commercial aircraft, while in November 2018, the figure was 79. Deliveries of the Boeing 737 Max were suspended in March 2019 and began to resume at the end of 2020.
As orders grow, Boeing plans to increase production of the 737 Max to 42 aircraft per month in the fall of 2022, and industry sources told Reuters. Boeing has publicly stated that it plans to steadily increase production from the current low production level to 31 aircraft per month in March 2022.
Deliveries of wide-body Boeing 787 Dreamliners used for international flights as the planes await approval from the US Federal Aviation Administration (FAA) after a quality investigation and production process control.
Despite the positive trend of increasing supplies and production, market analysts today do not recommend buying Boeing shares.
The restoration of air travel is hindered by the emergence of new COVID-19 strains, high air ticket prices, while Boeing is still waiting for China’s approval to return the 737 Max to the sky.
Current shareholders will have to be patient to wait for Boeing’s profit, as the company’s management has announced the priority of replenishing working capital and paying off debt. The approximate dates for the resumption of dividend payments and the share repurchase program have also not.
Instead, the aerospace giant is considering selling additional shares to pay off the debt accumulated due to the grounding of the 737 Max.
Despite the good news about rising shipments and orders, Boeing shares fell 0.7% on Tuesday as markets fell in anticipation of critical decisions expected from the Federal Reserve on Wednesday.
