What to watch for in Boeing earnings as Covid keeps it in ‘no man’s land’

Wall Street analysts polled by Refinitiv expect the aerospace giant to post a third-quarter loss of $2.47 per share, excluding one-time items, and revenue of $13.9 billion, a more than 30% drop from a year earlier.

Regulators appear to be edging closer to lifting their flight ban on the 737 Max, after several design changes. Boeing executives are likely to provide more detail about their expectations. In July, the company said it expected to have Federal Aviation Administration approvals that would let it resume deliveries of the planes to customers in the fourth quarter.

The aerospace giant, its suppliers, customers and rivals are facing mounting and interconnected losses from the coronavirus pandemic’s toll on air travel demand.

Airlines and other customers pay the bulk of an aircraft’s price when it’s delivered, so the dulled appetite for new planes is particularly painful for Boeing right now.

“One of the key problems that Boeing faces because of the Max situation and compounded by the pandemic is that production and delivery are not aligned,” said Robert Spingarn, an aerospace and defense analyst at Credit Suisse. “Production uses cash and delivery harvests cash,” which results in very extreme swings in cash flows.

Boeing delivered 98 airplanes in the first nine months of the year, compared with 301 in the same period of 2019.

The outlook for Boeing, like other companies tied to travel, is heavily dependent on a successful coronavirus vaccine or treatment, analysts say. Until then, or until the FAA clears the Max for flight, things are murky.

“They’re in no-man’s land,” said Jeffries aerospace and defense analyst Sheila Kahyaoglu. “It’s all Max and virus dependent.”

Analysts expect Boeing to report negative free cash flow for a sixth consecutive quarter with estimates of about $5.4 billion, which is a slight improvement from negative $5.6 billion in the three months ended June. 30.

Boeing in July announced it would cut production of its 787 widebody Dreamliner to six a month next year and slow its ramp up of 737 Max production.