Boeing (BA)’s recovery path and investment potential

What’s happening to Boeing?

June 1st, the much-anticipated day Boeing (BA) The Starliner spacecraft was scheduled to begin its maiden voyage to the International Space Station (ISS) with a human crew from Cape Canaveral, Florida. However, the automated system We stopped the countdown 4 minutes before takeoff..

The astronauts were safely extricated from the capsule, and officials are currently investigating a computer issue that disrupted the rocket’s final pre-launch sequence. The problem caused Starliner to miss a narrow launch window precisely timed to reach the ISS.

“It’s disappointing,” Steve Stich, NASA’s commercial crew program manager, said at a news conference after the launch scrub. “Everyone is a little disappointed, but we roll up our sleeves and get straight to work.”

The Starliner’s journey was anything but smooth. It was originally scheduled to launch three weeks ago, but the mission was aborted due to a valve malfunction. Further complications arose when engineers detected a helium leak and discovered a ‘design vulnerability’ in the propulsion system, causing further delays. Sunday’s backup launch was also canceled, with NASA citing issues with ground support equipment.

Boeing Starliner launch postponed again?

But despite the disappointment, Boring doesn’t give up. the company Might try another release But the last-minute suspension added to a long list of frustrations that have plagued the Starliner program for years. And every time Boeing makes a mistake, it increases America’s dependence on rival SpaceX to transport astronauts into space.

For Boeing, proving that the Starliner can operate reliably is not just about technical achievement. It’s about repairing our tarnished reputation and demonstrating that we can be a trustworthy partner for NASA.

Over the weekend, engineers conducted a thorough evaluation of the Starliner spacecraft’s onboard computers, power supplies and network communications systems. They identified the issue as a faulty ground power supply in one of the computers, which affected the operation of critical countdown events.

The affected computer was replaced with a spare computer and no physical damage was found. Meanwhile, mission experts are analyzing the faulty power supply to determine the root cause of the problem. All other computers and their components were evaluated and found to be functioning normally, according to the ULA team. Following a review by Starliner mission management, the spacecraft was cleared for launch (“launch”) on Wednesday.

The launch attempt comes as Boeing faces scrutiny over other high-profile incidents, including: Panel removal during flight Two fatal crashes occurred a few years ago. Although Boeing’s aerospace and space divisions are separate, these issues affect the company’s reputation.

The company has been contracted to build six scheduled flights for NASA to ensure a variety of astronaut transportation options. But the Starliner’s crewed debut was delayed for years. Until now, Boeing has There was a cost loss of $1.5 billion. The spacecraft’s setback cost NASA about $5 billion in development funding.

The crewed flight test scheduled for last weekend represents the final major step before being certified by NASA to begin regular missions. With increased oversight from NASA after past failures, Boeing must convince governments and the public of its reliability. If successful, this launch would mark the beginning of an important demonstration for Boeing.

conclusion

BA’s ability to deliver on its promises has come under scrutiny after a series of setbacks this year that have shaken confidence in its operations. In addition, as order cancellations increase, Decrease in cash reserves (Ranged from $4 billion to $4.5 billion in the first quarter) The situation is critical for the struggling aircraft manufacturer.

Boeing reported a 36% year-over-year decline in commercial aircraft deliveries in the first quarter of fiscal 2024. This caused the company’s operating cash flow to drop to negative $3.36 billion and non-GAAP free cash flow to negative $3.90. The loss amounted to $1 billion, a significant increase from last year’s loss. The company posted the following: Total revenue decreased by 7.5% compared to the previous year 16.57 billion dollars. Adjusted core operating losses were $388 million and $1.13 per share, respectively.

In this context, questions about Boeing’s investment attractiveness are rising on Wall Street. Analysts expect BA’s revenue for the second quarter ending June 30, 2024 to hit $18.48 billion, down 6.5% year-over-year. The company is expected to report a loss per share of $0.85 for the quarter.

Specific plans are not yet known, but early signs suggest a focused effort to enhance operational efficiency and quality control measures. For example, BA’s plan is: Acquisition of Spirit AeroSystems Addressing quality control and operational efficiency issues reflects efforts to streamline supply chains, enhance production capacity, and increase control over supplier policies and practices.

The upcoming period is critical to the company’s long-term survival. Moreover, when it comes to the space industry, we definitely see stiff competition from Boeing. For example, SpaceX has been working with NASA to launch astronauts and rockets on a regular basis since 2020.

Over the past five days, shares in BA have risen nearly 6%. However, as of the beginning of the year, Boeing has failed to take off, with its stock price plummeting by more than 29%.

However, analysts maintain their position: average purchase The consensus rating for BA shares reflects a cautiously optimistic outlook due to ongoing concerns. With a price target of $216.96 per share (22.16% upside), we remain cautious about BA’s potential recovery and resurgence in the coming months.

Overall, investor confidence remains mixed, and uncertainty remains surrounding Boeing’s overall financial impact and its impact on the aviation industry as a whole.