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JPMorgan analysts lower Boeing cash flow estimates

Published 05/28/2024, 08:56 AM
© Reuters

Investing.com -- Boeing's (NYSE:BA) cash flow is expected to come under pressure from fewer deliveries of its key 737 and 787 aircraft, as well as an ongoing push to improve its safety procedures, according to analysts at JPMorgan.

In a note to clients on Tuesday, the analysts lowered their projections for the planemaking giant's free cash flow in both the current quarter and full year.

The move comes after Boeing Chief Financial Officer Brian West said at a conference last week that the company now expects its second-quarter cash burn to be "possibly a little worse" than the $3.9 billion used in the prior three-month period, due partly to delivery delays. West had previously told analysts in April that cash burn would improve in the second quarter.

Production of Boeing's key 737 Max jet dipped to as low as single digits last month, according to Reuters. Analysts have noted that output has been crimed by inspections of jets that have already been through final assembly.

U.S. aviation regulators, responding to safety concerns sparked by a dangerous mid-air breach on a Boeing 737 Max model in January, have also limited Boeing's monthly production.

Meanwhile, deliveries to China have been pinched while authorities in the country review the batteries that power cockpit voice recorders. The JPMorgan analysts suggested that geopolitical tensions between the U.S. and Beijing may be factoring into this development.

The analysts said they have subsequently left their estimates for cash flow beyond 2024 little changed "for now," adding that they will refine the forecast as they learn more about the trajectory of Boeing's 737 deliveries. Boeing has delivered 30 737s so far in the second quarter, the analysts estimated, citing data from aviation analytics group Cirium.

"[W]e do believe increasing 737 production responsibly is the most important thing Boeing can do and so we’ll be watching for further developments around the delivery cadence of the more recently built aircraft," the JPMorgan analysts said.

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