Boeing (BA) is grappling with disappointing financial performance from its 737 MAX, a situation exacerbated by past safety issues and the impact of COVID-19. CEO Kelly Ortberg, in his inaugural earnings call, emphasized the need for a new narrow-body aircraft to replace the 737 MAX, projecting a development cost of around $50 billion. However, Boeing’s current cash flow from the 737 MAX has not instilled confidence in its ability to finance this significant investment, with analysts estimating the company will still carry $5.9 billion in net debt through 2028.
Despite a robust backlog of $682 billion, including over $560 billion in its commercial segment, the reliance on equity raises concerns about shareholder dilution. The recent $24.3 billion stock offering reflects the challenges Boeing faces in balancing growth and investor returns. As the company aims for a new aircraft launch by the mid-2030s, market professionals should remain vigilant about the implications of further dilution and debt on Boeing’s long-term financial health.
Source: fool.com