Latest news with #DavidStrauss
Straits Times
2 days ago
- Business
- Straits Times
Boeing's quarterly loss shrinks as jet deliveries rebound, but shares drop
Sign up now: Get ST's newsletters delivered to your inbox Boeing still reported a second-quarter loss of US$612 million, but that was a big improvement over the US$1.4 billion loss a year ago. SEATTLE - Boeing's quarterly loss more than halved and was much smaller than analysts expected as the US planemaker ramped up jet deliveries, recovering from a regulatory crisis and a major strike that halted most production in 2024. The results highlighted Boeing's efforts to cautiously increase monthly output in 2025, following years of quality issues and production delays on its flagship 737 MAX. However, Boeing shares closed down 4.4 per cent on July 29, after its results announcement. The drop was 'surprising' and unwarranted based on the quarterly results, Barclays Capital aerospace analyst David Strauss said in a note to investors. The company's financial improvements were tempered by its announcement that certification of the 737 MAX 7 and 10 models will not happen until 2026, another setback for those programmes. The company previously said it expected to finish certification by the end of this year. The company is still developing solutions to address problems with the 737 MAX models' engine de-icing systems that are stalling certification, which is proving a 'little more tricky' than anticipated, Boeing chief executive officer Kelly Ortberg told CNBC. During the interview, he praised US President Donald Trump's aggressive use of tariffs to hammer out trade deals. 'I like the way this tariff situation is playing out,' Mr Ortberg told CNBC. 'It's good for our business, is good for aerospace,' and will create jobs in the United States. The United States and European Union agreed to exempt aircraft and aviation parts from tariffs. However, raw materials such as steel and aluminum remain subject to steep duties. Boeing still reported a loss of US$612 million (S$788 million) in the quarter, but that was a substantial improvement over the US$1.4 billion loss during the same period a year ago. Mr Ortberg joined the company in August 2024 as it sought to recover from its latest crisis, caused by a poorly installed panel that blew off a Boeing 737 Max jet during a flight early last year. No one was killed, but the episode resurfaced widespread concerns about Boeing's planes five years after two fatal crashes involving the Max. The new CEO ordered changes aimed at improving quality and safety. And the company has steadily increased production and deliveries of its passenger planes since. Boeing delivered 280 commercial jets in the first half of this year, the most in the first six months of any year since 2018, before the fatal Max crashes. Boeing has also increased production of the Max to 38 planes per month, a ceiling the Federal Aviation Administration imposed after the panel blowout. Mr Ortberg said the company was planning to ask the FAA for permission to increase production to 42 Max jets a month when internal quality metrics indicated that it was safe to do so. The company has also increased production of the 787 Dreamliner, a larger, twin-aisle plane, to seven jets per month. New orders for the company's planes have improved, too, with more than 420 commercial jets ordered in the second quarter. That was its best quarterly sales since late 2023. Those orders may have been boosted by trade deals struck by Mr Trump, several of which included commitments from other countries to buy Boeing planes, though experts said that many such orders might have been placed anyway. REUTERS, NYTIMES
CNBC
25-04-2025
- Business
- CNBC
Private jet demand declines as tariffs spook would-be buyers
With consumer confidence tumbling, demand for commercial air travel has waned. Even deep-pocketed travelers are pulling back, according to Barclays' latest survey of business jet broker-dealers and financiers. Customer interest in buying business jets has fallen by 49% since March, according to the survey, which was conducted from April 9 to 15 and had 65 respondents. The Barclays Business Jet Indicator survey, published last week, uses five metrics, including 12-month outlook and pricing, to assess the state of the market. All but one metric (inventory levels) declined from mid-March to mid-April. As a result, the composite score fell from 52 to 40. The percentage drop recorded in the most recent survey, at 23%, is the largest recorded by Barclays since the Covid pandemic. Barclays analyst David Strauss told CNBC that he expected sentiment to weaken but not to such a large degree. A composite score in the low 40s indicates the market is slowing, according to Barclays. The indicator correlates with airplane manufacturers' book-to-bill ratio, a key measure of their financial health. A score of 40 indicates that dollar value of manufacturers' new orders is lagging about 10% behind the orders it is currently fulfilling, Strauss said. Survey respondents told Barclays that clients had put purchases on hold, fearing the impact of tariffs not only on the aircraft market but also their operating businesses. The Inside Wealth newsletter by Robert Frank is your weekly guide to high-net-worth investors and the industries that serve them. Subscribe here to get access today. Nearly half (46%) of participants said that customer interest in buying business jets had deteriorated since March. Forty-four percent said customer interest stayed the same and only 10% reported it had improved. When asked specifically about the effect of tariffs on new aircraft demand, 93% of respondents said it would have a negative impact on demand, with a majority expecting the impact would be significant. Only 7% said they believed there would be no impact. As for used jets, 67% of respondents were still pessimistic, expecting a significant or minor negative impact on demand. A little under a third (27%) expected demand for used jets to increase by some degree. However, pending legislation may give business jet manufacturers a shot in the arm. Both the Senate and House of Representatives have adopted a budget resolution that aims to extend the Tax Cuts and Jobs Act. A key provision of the TCJA allowed businesses to immediately deduct 100% of eligible equipment purchases rather than spreading out the deduction over time. The rate has dropped 20% annually since 2023 and was set to phase out in 2027. Republican lawmakers now have a path to raise the rate back to 100% and allow retroactive deductions, which President Donald Trump called for in March. If they succeed in bringing back 100% bonus depreciation, private aircraft would become much more attractive from a tax perspective.
