Boeing (BA) stock in turbulence: Why its descent may be far from over

Core Viewpoint - Boeing Co. is experiencing significant operational, financial, and regulatory challenges, leading to a substantial decline in stock performance, with a year-to-date drop of approximately 40% [1][2][7] Operational Challenges - Boeing reported a net loss of $1.44 billion, or $2.33 per share, in Q2 2024, a stark contrast to a loss of $149 million in the same period last year [2] - The company missed analyst expectations on an adjusted basis, posting a loss of $2.90 per share, nearly $1 below forecasts [2] - Production delays for the 737 MAX jets due to quality control issues have compounded operational setbacks, leading to the grounding of several planes [2] Labor Disputes - A strike by 33,000 machinist workers has entered its sixth week, with demands for a 40% wage increase, while Boeing has only offered a 30% raise [3] - The strike is costing Boeing over $1 billion per month and has halted production lines for key aircraft models, including the 737 MAX, 767, and 777 [3] - Suppliers are also affected, with Spirit AeroSystems furloughing 700 workers due to production stoppages, indicating potential long-term supply chain disruptions [3] Regulatory Scrutiny - The FAA has initiated a three-month review of Boeing's safety compliance following a mid-flight incident involving a 737 MAX [5] - Safety concerns have been raised regarding manufacturing processes, with the NTSB issuing urgent recommendations related to rudder issues on certain 737 models [5] - Allegations from a whistleblower regarding Boeing's awareness of safety issues have further eroded trust in the company's safety culture [5] Financial Outlook - Boeing is facing a cash flow crisis exacerbated by the ongoing strike and regulatory challenges [6] - The company plans to reduce its white-collar workforce by 10%, amounting to 17,000 jobs, and aims to raise up to $25 billion through debt and stock offerings [6] - Analysts have mixed views, with a consensus rating of "Moderate Buy" among 24 analysts, but some have lowered price targets due to deepening challenges [6] Future Prospects - The combination of financial strain, production halts, and regulatory challenges suggests that Boeing's recovery may take longer than anticipated [7] - Ongoing indirect discussions between the striking union and Boeing may lead to a resolution, but uncertainty remains [7] - Investors are closely monitoring the upcoming quarterly earnings report scheduled for October 23, 2024 [7]