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737 MAX deliveries are key if the plane maker is to generate cash this year, but maintaining June’s positive trends won’t be easy
The once-troubled 737 MAX jet now carries Boeing investors’ hopes and dreams.
On Wednesday, the Arlington, Va.-based plane maker reported second-quarter earnings that fell short of Wall Street expectations. Still, free cash flow, which is a more important metric, was better than forecast thanks to a jump in MAX deliveries. If it keeps this going, Boeing should hit its target of positive cash flow for the year for the first time since 2018.
To be sure, defense revenues continued to disappoint and U.S. regulators still haven’t cleared the way for its other key product, the 787 Dreamliner, following a series of defects. But deliveries seem set to resume this summer, and the fallout from the war in Ukraine will probably soon send a wave of cash toward defense contractors.
The fate of the MAX is subject to many more unknowns, both positive and negative. It may be the key driver of Boeing’s stock, which is down more than 50% since the onset of the pandemic but still not an obvious buy. The plane maker is trading at an enterprise value of around 12 times expected 2024 earnings—the year when travel is expected to fully recover. This is in line with pre-Covid valuations, but those were historically elevated.
On the one hand, the MAX is selling better than its detractors predicted. During last week’s Farnborough International Airshow, it garnered 233 orders, including 100 planes by Delta Air Lines —the only top U.S. carrier that hadn’t yet bought it. This compared with 73 orders for Airbus’s competing A320 family. The A320 remains more popular overall. Counterintuitively, though, this may work in favor of the MAX right now, as airlines are much more likely to get their planes ahead of time. While the A320 has a backlog of around 6,000 orders, the MAX’s is closer to 3,400 due to cancellations in recent years.
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Boeing entered Farnborough Airshow behind Airbus, particularly in the narrow-body jet market
Boeing is typically nearly tied for orders with rival Airbus entering the annual Farnborough Airshow, but this year it's well behind. WSJ’s George Downs reports from the show on how Boeing is trying to catch up and what it will take to restore balance to the aviation duopoly.
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Carrier is offering more flexibility as it expects some challenges despite efforts to reset operations
Delta’s broad waiver underscores the challenging conditions that travelers could encounter this weekend.
Nervous about flying during a busy holiday weekend? Delta Air Lines Inc. has an alternative: don’t.
Delta is allowing customers to change flights for free, letting them rebook trips before or after potentially challenging weekend days without paying a higher last-minute fare or a change fee.
The waiver will apply across Delta’s entire network for July 1 through July 4, as long as customers travel between the same origins and destinations by July 8.
Delta said it expects some challenges this holiday weekend, despite efforts by the company and its staff to reset the carrier’s operations.
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For some customers, online chatting or sending a DM may be a quicker way to reach the airlines
It’s the recorded message no traveler with flight troubles wants to hear. “Due to an earlier technical issue we’re receiving more calls than we typically do and are unable to take your call at this time,” United Airlines told callers Sunday afternoon.
Travelers trying to reach American Airlines’ toll-free customer service line the same day were put on hold and offered the option of a callback that ranged from one hour and 14 minutes to one hour and 42 minutes.
And this was on a relatively calm travel day.
Airlines have promised reduced hold times this summer because of robust customer-service hiring and a plethora of self-service tools. Yet reaching an airline representative can still take a long time. These waits are particularly harsh when bad weather and other issues drive cancellations and delays as they did over the long weekend that included Father’s Day and the Juneteenth holiday.
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Throughout the pandemic, airlines have had a tough time figuring out when travel would return and how strong demand would be. But now that demand is rebounding strongly, airlines are facing challenges trying to meet it. Wall Street Journal airlines reporter Alison Sider joins WSJ What’s News host Annmarie Fertoli to discuss.
Annmarie Fertoli: Throughout the pandemic, airlines have had a tough time figuring out when travel would return, how strong demand would be and how long it would last. After a couple of dips, another rebound in travel is upon us. Airlines and hotels are boosting hiring, but the labor market is even tighter now, so will they be able to meet soaring demand? I'm Annmarie Fertoli from The Wall Street Journal, and joining me now with more on this is Wall Street Journal airlines and air travel reporter, Alison Sider. Hi, Alison, thanks for being here.
Alison Sider: Hi, thanks so much for having me.
Annmarie Fertoli: Alison, we've heard from a number of companies, this earning season who report that a travel rebound is here. What metrics are they using to figure that out?
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Spirit Airlines Inc. rebuffed a $3.6 billion cash takeover bid from JetBlue Airways Corp., saying a deal likely can’t be completed, and it is sticking with plans to merge with rival budget carrier Frontier Group Holdings Inc.
JetBlue’s offer for Spirit came with a higher price tag than Frontier’s cash-and-stock offer, which was originally valued at $2.9 billion. However, Spirit’s board said it believed there was too much risk that regulators would bar a merger with JetBlue, even after JetBlue pledged to shed assets to win regulatory approval and to pay a $200 million breakup fee if it was unable to complete the proposed acquisition for antitrust reasons.
“After a thorough review and extensive dialogue with JetBlue, the Board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders,” Spirit Chairman Mac Gardner said Monday.
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SYDNEY—Australia’s biggest airline, Qantas Airways Ltd., said it would order dozens of planes from European maker Airbus SE, including new aircraft to fly nonstop between Australia’s cities and destinations in the U.S. and the U.K. that currently require a layover.
Qantas said the new ultralong-haul, nonstop flights, dubbed Project Sunrise, would start from late 2025 and would at first connect Sydney with London and New York. The airline said the flights will try to build on the success of existing direct long-haul services, demand for which has increased following the Covid-19 pandemic.
Qantas currently flies nonstop from Australia’s east coast to cities such as Los Angeles and Dallas, but New York is too far, and its service to London flies through Darwin, a city on Australia’s northern coast. Qantas conducted research flights a few years ago to test how passengers fare on ultralong-haul routes, with one flight between New York and Sydney taking more than 19 hours.
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The Federal Aviation Administration said it is working with airlines to ease mounting air-traffic problems in Florida, where bad weather and staffing shortages have snarled flights as demand for air travel in the state surges.
The FAA said it would increase air-traffic-control staffing and tweak flight practices to address the strains, after meeting with about a dozen airlines, small-plane operators and aviation groups.
More-frequent thunderstorms in Florida, which has a large population and popular vacation spots, have disrupted flights in recent months, and some airlines have said they are sharing airspace with more space launches from Kennedy Space Center, located along the Atlantic in central Florida.
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