Why Boeing Shares Are Rising After Missing Revenue, Burning Cash

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Boeing  (BA) - Get Report shares rose after the company missed slightly on revenue expectations for the first quarter, but assured investors that the company is shoring up its liquidity position and cutting costs in the wake of plummeting demand. 

The stock rose 8% Wednesday. 

Here were the results:

  • Revenue: $16.9 billion vs. analysts estimates of $17 billion. 
  • Deliveries: 50
  • Loss per share: $1.70 v. $1.60
  • Free cash flow: -$4.73 billion

A normal quarter for deliveries, pre-virus and before the 737 Max grounding problem, would be well over 100. The revenue results was a 26% decrease year-over-year. The airline industry has seen revenues almost vanish as air travel is currently not a consideration for any consumer. 

The company said the pain will get worse, especially as the second quarter encapsulates a time period in which lockdowns were in full swing. 

But quelling investor anxiety was what the company is doing away from the revenue side of the equation. First off, with the revenue picture looking bleak, Boeing said it is aggressively operating expenses such as research and development, headcount and other items. It will also cut capital expenditures to limit the cash burn it’s incurring. 

Boeing raised more debt from its credit revolver, bringing its total debt up to $39 billion. That brought its cash pile up by 55% quarter-over-quarter to $15.5 billion, enabling it to fund its operations for the near-term. 

Coming out of the lockdowns and recession, Boeing will no longer have the balance sheet it once had, making it a more risky company, much of which the market has priced into the stock. 

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