Boeing Shares Sink Despite Upbeat 2nd-Quarter Earnings

‘Change takes time, but we’re starting to see a difference in our performance across the business,’ Boeing CEO Kelly Ortberg said.

The Boeing logo at the company's factory in Renton, Wash. AP Photo/Lindsey Wasson

Shares of U.S. aerospace giant Boeing fell by about 3 percent despite a better-than-expected second-quarter earnings report.

The latest earnings indicate that the company’s financial health, which has suffered over the past year, is improving under the leadership of CEO Kelly Ortberg.

Boeing lost $176 million in the April–June period, down from $1.09 billion a year ago. After adjusting for one-time expenses, quarterly losses totaled $433 million, or a better-than-expected $1.24 per share.

Revenues surged $22.75 billion, higher than the market estimate of $21.84 billion. This was driven mainly by an 81 percent year-over-year increase in the company’s commercial airplane unit, totaling $10.87 billion.

The company also burned through less cash. In the second quarter, Boeing consumed $200 million, down from $4.3 billion in the year-ago period.

A solid earnings report was not enough to satisfy Wall Street.

First, Boeing announced that the long-awaited certification of the 737 Max 7 and Max 10 will not happen this year. Ortberg pushed back the expectation to next year.

“It’s proved to be a little more tricky than what I would have forecasted that we'd be through that design work right now,” Ortberg said during a July 29 interview with CNBC’s “Squawk on the Street.”

“We have several solutions that we’re still working to finalize, and that’s why we’ve decided to move the certification into next year.”

Boeing’s earnings were also impacted by a $445 million charge resulting from an arrangement with the Department of Justice to avoid prosecution related to two incidents involving its best-selling 737 Max that killed 346 individuals.

Ongoing safety concerns, potential labor unrest in its defense segment, and deteriorating quarter-over-quarter loss per share have been other factors that have harmed the stock.

Boeing shares declined by about 3 percent, but are up more than 33 percent this year.

According to MarketBeat, the stock enjoys a consensus “Moderate Buy” rating and a consensus 12-month price target of $221.55.

Many Wall Street analysts have reiterated or upgraded their ratings this month, including Citigroup, JPMorgan Chase, Sanford C. Bernstein, and Susquehanna.

Ortberg, writing in a note to staff, expressed optimism over the company’s changes.

“Change takes time, but we’re starting to see a difference in our performance across the business,” he said. “If we continue to tackle the important work ahead of us and focus on safety, quality, and stability, we can navigate the dynamic global environment and make 2025 our turnaround year.”

Trump Trade Deals

Boeing has garnered attention for its presence in President Donald Trump’s trade deals.

The Boeing 737 MAX aircraft is displayed at the Farnborough International Airshow, in Farnborough, England, on July 20, 2022. Peter Cziborra/Reuters

The European Union, the United Kingdom, Japan, and Indonesia have committed to purchasing billions of dollars’ worth of Boeing aircraft.

Bangladesh is the latest country to emulate others. Its government offered to purchase 25 jets from Boeing as part of efforts to encourage Trump to lower tariffs.

“We have made commitments that are maintainable for us. The Boeing purchase is part of that,” Bangladeshi Commerce Secretary Mahbubur Rahman said in an interview with Bloomberg on July 27. “If they compare our offer with others, we should get a better deal.”

The aerospace manufacturer has been a significant component of other economic cooperation arrangements established by the White House with several Middle Eastern countries.

Saudi Arabia, for example, will purchase 737-8 passenger aircraft for AviLease, a deal worth $4.8 billion.

Boeing has also benefited from tariff-related provisions in the administration’s deals.

In the U.S.–EU trade agreement, the zero-for-zero tariff inclusion for airplanes and aircraft parts will prove critical for the company.

“It’s super critical,” Ortberg said. “The administration is doing a really, really good job as they’re negotiating these bilaterals, taking into account the implications on the aerospace industry.”

The latest trade deals have given the company more confidence to navigate through the tariff climate, Ortberg added.

“I like the way this tariff situation is playing out,” he said. “It’s good for our business. It’s good for aerospace.”