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Boeing (NYSE: BA) stock price lost close to 12% of value in the past five days alone as fundamentals of the passenger airline industry turned bleak amid the second coronavirus wave and fresh lockdowns.
Several European countries have imposed new business and travel restrictions due to the record increase in daily coronavirus infections. The situation is similar in the United States. Boeing’s third-quarter results indicate a challenging time for its commercial airplanes and global services segment.
Short-term fundamentals are bleak
Boeing has burned close to $22 billion in free cash flows since March 2019 due to 737 MAX jet grounding and pandemic related challenges. Moody’s has provided a BBB rating while S&P slashed Boeing’s outlook to negative.
Its free cash flows in the third quarter came in at negative $5 billion, with total cash balance dropped to $10 billion from $20 billion in the year-ago period.
Its commercial airplanes segment has been hit hardest by the travel restrictions. The company says air travel demand will take three years to reach the pre-pandemic level. On the positive side, Boeing has been taking actions to align with trends. It has slashed operating costs and reduced the staff count. The company recently announced to cut 30,000 jobs in the next two years.
“The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient, and more sustainable for the long term,” said Boeing President and Chief Executive Officer Dave Calhoun.
Third-quarter results show headwinds for Boeing stock
Boeing stock is likely to face more volatility amid bleak fundamentals and a lack of support from financial numbers. Boeing stock price plunged 57% in the past twelve months.
Its third-quarter revenue fell 29% from the year-ago period while loss per share came in at $1.39. It’s all three business segments have reported year over year revenue drop. Revenue by segment: Commercial Airplanes -56%; Defense, Space & Security -2%; Global Services -21%.