As demand for air travel gathered momentum over the past two months, the CDC has identified two additional coronavirus mutations as variants of concern. Currently, TSA checkpoint numbers remain 36% below 2019 levels, underscoring a strong recovery in demand for air travel. With the lifting of the FAA’s ban on MAX aircraft, Boeing (NYSE: BA) has made the necessary changes to its ground fleet. The company has an inventory of more than 400 aircraft and is expected to ramp up production of the 737 MAX during the second half of the year. As multiple strains of coronavirus remain a short-term concern for the travel industry, Boeing
Huge 737 MAX order book despite production issues
According to the latest reports, Boeing’s 4,000 commercial aircraft backlog includes 3,240,737, 263,777 and 442,787. The commercial aircraft segment alone accounts for 80% of the total order backlog of $ 363 billion. As the Commercial segment’s backlog fell from $ 377 billion in the fourth quarter of 2019 to $ 281 billion in the fourth quarter of 2020, the lifting of the MAX ban and the drop in coronavirus cases in the United States should make increase demand for Boeing aircraft.
Despite a prolonged headwind facing the commercial segment, the company’s defense and space activities contributed more than 40% of revenue last year. With growing interest in space activities and multi-year defense contracts, the segment is expected to experience another year of stable revenue and profit growth.
With easing inventory levels, Boeing stock has upside potential
Boeing’s long-term debt fell from $ 10 billion in 2018 to $ 62 billion in 2020 as inventories piled up and the company raised capital to deal with any adverse pandemic scenario. Inventories jumped $ 20 billion, from $ 62.5 billion in 2018 to $ 82 billion in 2020. Since the balance sheet contains $ 25 billion in cash and short-term investments, the The increase in long-term debt securities is mainly attributable to high levels of inventories. The stock’s market cap is $ 60 billion below pre-Covid levels and we believe there is a significant rise in the stock as the pressure on stocks eases.
East Lockheed Martin
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