Investing in Boeing Stock (BA)

What you need to know about investing in Boeing

The Boeing Co. (BA) is one of the world's leading aerospace companies. It develops and manufactures commercial jets, military aircraft, weapons systems, and strategic defense and intelligence systems. The company also provides services to its commercial and defense customers, including supply chain and logistics management, engineering, maintenance, upgrades, pilot training systems, and data analytics. It also offers financing services to customers to support the purchase and delivery of their product.

Boeing traces its origins to 1916 with the founding of Aero Products Co. by William E. Boeing, who had recently co-developed a single-engine, two-seat seaplane with Conrad Westervelt. The company was renamed Boeing Airplane Co. the following year. Boeing Airplane spent a brief period in the airline business in the late 1920s and early 1930s, but new antitrust legislation in 1934 required the separation of airplane manufacturing from air transport. The company's expansion into military aircraft and weapons systems began during World War II. Boeing went public through an initial public offering (IPO) on Jan. 2, 1962.

Boeing's headquarters are located in Chicago, Ill. David L. Calhoun is the company's chief executive officer (CEO). Boeing is classified as a member of the S&P 500 industrials sector and operates within the aerospace and defense industry. Some of its main competitors include Europe-based Airbus SE (AIR), Lockheed Martin Corp. (LMT), and Northrop Grumman Corp. (NOC). Boeing reported a net loss of $11.9 billion on $58.2 billion in annual revenue in its 2020 fiscal year (FY).

Key Takeaways

  • Boeing manufactures commercial and military aircraft, weapons systems, and strategic defense and intelligence systems.
  • The company's main rivals include Airbus SE (AIR), Lockheed Martin Corp. (LMT), and Northrop Grumman Corp. (NOC).
  • Boeing posted a net loss of $11.9 billion on revenue of $58.2 billion in FY 2020.
  • In its recent results for Q3 FY 2021, Boeing missed analyst expectations for adjusted EPS, revenue, and commercial airplane deliveries.

Recent Developments

  • On Oct. 27, 2021, Boeing released its earnings results for Q3 FY 2021. The company missed consensus estimates on both adjusted earnings per share (EPS) and revenue, posting a bigger adjusted loss per share and lower revenue than analysts expected. Boeing also delivered fewer commercial airplanes during the quarter than forecast. Since early 2020, orders for the company's commercial aircraft have been badly hurt by the COVID-19 pandemic as collapsing travel demand has prompted airlines to delay new orders. Passenger travel has been recovering this year amid vaccine rollouts and easing of travel restrictions. But production issues related to its 737 MAX and 787 Dreamliner have also hampered Boeing's financial performance. (See Q&A below for more detail.)
  • On Oct. 12, 2021, Boeing announced that its employees in the U.S., which number approximately 125,000, must show proof of vaccination against COVID-19 by Dec. 8 in compliance with President Joe Biden's executive order for federal contractors. Employees can request approval for exemption from the mandate for religious or medical reasons.

What's Happening with the 737 MAX?

Boeing's 737 MAX was grounded by the Federal Aviation Administration (FAA) and other aviation authorities worldwide in March 2019. The grounding followed two crashes within the span of five months that killed 346 people. During manufacturing, Boeing had installed a new system in the 737 MAX designed to prevent stalling of the aircraft. But subsequent investigations determined that the system had malfunctioned inflight and contributed to the accidents. In November 2020, the FAA lifted its grounding order and Boeing began to resume deliveries of the aircraft. However, the company faces multiple lawsuits related to the accidents and is under investigation by the U.S. government, including the Securities and Exchange Commission (SEC). The grounding of the 737 MAX and the resulting halt in deliveries to customers has significantly affected Boeing's financial strength, including its revenue and earnings.

In early April 2021, Boeing notified the FAA that it had made recommendations to operators that certain 737 MAX jets be temporarily removed from service in order to address issues that might affect the operation of the electrical power system. Later that month, the FAA said that 106 737 MAX airplanes had been grounded globally and that Boeing was still in the process of fixing the problems.

Boeing resumed deliveries of the aircraft in May after determining that it had fixed the issues. The company also noted that it does not expect this matter to have a material financial impact on its 737 program. Through the first nine months of 2021, Boeing has delivered 179 737 jetliners compared to 12 deliveries during the same period in 2020.

What's Happening with the 787 Dreamliner?

Boeing's 787 Dreamliner aircraft has suffered a series of manufacturing quality issues over the past year. The problems began in September 2020 when the FAA said it was looking into manufacturing flaws in the aircraft. Eight 787s were removed from service by airlines in response to the FAA's investigation.

Boeing paused its deliveries of the aircraft before resuming them again in March 2021. However, it halted deliveries again in May after the FAA raised concerns about the company's proposed inspection method. These delays resulted in escalating costs and abnormally low production rates for the 787 throughout Boeing's third quarter, which ended Sept. 30, 2021.

On Oct. 14, 2021, it was reported that new defects in the 787 Dreamliner had been detected. Certain titanium parts used to build the aircraft over the past three years were found to be weaker than they should be. Both Boeing and regulators concluded that the problem does not pose an urgent safety risk to planes in service.

Boeing said in its third quarter earnings release, published Oct. 27, that it was focusing its 787 production efforts on inspections and rework, and that it was continuing to discuss with the FAA required actions for resuming deliveries. Through the first nine months of 2021, Boeing delivered 14 787 aircraft compared to 49 deliveries during the same period of 2020.

FAQs

Has Boeing (BA) ever split its stock?

Boeing has split its stock a total of 15 times, seven of which were before the company went public in 1962 and eight of which occurred afterward:

  • May 9, 1952: a 3-for-2 split.
  • May 7, 1954: a 2-for-1 split.
  • July 13, 1956: a 2-for-1 split.
  • Nov. 19, 1956: 2% stock dividend (1 share for each 50 shares).
  • Nov. 19, 1957: 4% stock dividend (1 share for each 25 shares).
  • Nov. 19, 1958: 4% stock dividend (1 share for each 25 shares).
  • Nov. 12, 1959: 4% stock dividend (1 share for each 25 shares).
  • May 3, 1966: a 2-for-1 split.
  • Aug. 11, 1977: a 2-for-1 split.
  • March 12, 1979: a 3-for-2 split.
  • March 14, 1980: a 3-for-2 split.
  • May 10, 1985: a 3-for-2 split.
  • May 12, 1989: a 3-for-2 split.
  • May 18, 1990: a 3-for-2 split.
  • May 16, 1997: a 2-for-1 split.

Does Boeing (BA) pay a dividend?

No. Boeing suspended dividend payments until further notice as of March 20, 2020.

How many shares of Boeing (BA) stock are there?

As of Oct. 20, 2021 Boeing had 587,699,224 shares of common stock outstanding.

Who is Boeing's CEO?

David L. Calhoun is CEO and president of Boeing, positions he assumed in January 2020. He has been a member of the board of directors since 2009 and was chairman from October to December 2019. He has extensive executive, management, and operational experience. Prior to his current positions with Boeing, Calhoun served as senior managing director and head of portfolio management at The Blackstone Group since January 2014. He also was CEO at Neilsen Holdings PLC (NLSN) and vice chairman of General Electric Co. (GE).

Article Sources

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  11. The Boeing Co. "Form 10-Q for the quarterly period ended September 30, 2021," Page 16. Accessed Nov. 2, 2021.

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    After the 2 Deadly Crashes." Accessed Nov. 2, 2021.

  13. The New York Times. "Boeing 737 Max Is Cleared by F.A.A. to Fly Again." Accessed Nov. 2, 2021.

  14. The Boeing Co. "Form 10-Q for the quarterly period ended September 30, 2021," Page 8. Accessed Nov. 2, 2021.

  15. CNBC. "Boeing still working on fix for 106 grounded 737 Max planes, FAA says." Accessed Nov. 2, 2021.

  16. The Boeing Co. "Form 10-Q for the quarterly period ended September 30, 2021," Page 48. Accessed Nov. 2, 2021.

  17. CNBC. "Boeing says certain 787 parts improperly manufactured." Accessed Nov. 2, 2021.

  18. The Boeing Co. "Form 10-Q for the quarterly period ended September 30, 2021," Page 13. Accessed Nov. 2, 2021.

  19. The Wall Street Journal. "Boeing Deals With New Dreamliner Defect Amid Production Problems." Accessed Nov. 2, 2021.

  20. The Boeing Co. "Boeing Reports Third-Quarter Results." Accessed Nov. 2, 2021.

  21. The Boeing Co. "STOCK INFORMATION: Stock Split History." Accessed Nov. 1, 2021.

  22. The Boeing Co. "INVESTOR RESOURCES: Frequently Asked Questions." Accessed Nov. 1, 2021.

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