Boeing released delivery numbers for July on Tuesday evening. The numbers aren’t great, but that isn’t a surprise. They reflect the deep, painful aviation downturn induced by the Covid-19 viral pandemic.
Boeing (ticker: BA) delivered just four jets in July 2020. In July 2019, Boeing delivered 19 jets. In July 2018, Boeing delivered 39 jets, including 12 MAX jets.
MAX’s problems affected the 2019 figure. The 737 MAX has been grounded worldwide since mid-March 2020 following two deadly crashes inside of five months. Boeing is working on design and training fixes to return the plane to commercial flight, and it believes it can start delivering MAX jets to customers in late summer/early fall.
In a normal—non-MAX, non-pandemic—year, Boeing should be delivering roughly 60 to 70 planes a month, based on 2017 and 2018 figures. Deliveries will fluctuate widely from month to month. But, so far in 2020, the commercial aerospace giant has delivered just 74 planes in total.
“Deliveries in July took a step lower after signs of improvement in June,” wrote RBC analyst Michael Eisen in a Tuesday research report. “Cancellations continue to eat away at the company’s backlog. We continue to look for a meaningful order to help spur confidence in the outlook for commercial aircraft demand, but believe it will take the recertification of the MAX to see such an order come in.”
A big order looks like it's a long way off. Boeing also realized 43 more MAX deferrals and cancellations during the month. Another nine MAX jets were removed from the company’s backlog because of accounting rules, but there are still binding contracts for those nine planes.
Year to date, Boeing has seen about 900 cancellations. The total company backlog stands at about 5,200 jets.
The MAX accounted for all the July cancellations, but it’s tough to blame MAX-specific woes on recent order trends. Instead, the entire aerospace industry is suffering through an unprecedented demand decline because of the virus. Air travel in the U.S., since March, is down 78% year over year.
Sector share prices have been hammered by the travel declines. Boeing stock is down 45% year to date. Stock in Boeing peer Airbus (AIR.France) is down 42%. Airline stocks in the U.S. are down 47% on average. And aerospace supplier stocks Barron’s tracks are down more than 30% on average. Sector returns lag far behind the comparable returns of the Dow Jones Industrial Average and S&P 500. It has been a tough year for commercial aerospace.
Boeing stock is down 0.8% in early Wednesday trading, at $178.70, worse than the overall market. But shares are still up about 5% for the week because virus news, and not MAX cancellations, are driving the stock these days.
Covid vaccine news has been relatively positive this week. The U.S., for instance, struck a deal with Moderna (MRNA) for a vaccine, and Russia announced Tuesday it had a vaccine ready. The Russian news, however, was met with a lot of skepticism.
Write to Al Root at allen.root@dowjones.com
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August 12, 2020 at 10:10PM
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