Boeing preannounces sharp top and bottom line miss; Will investors care?

Boeing (BA) delivered a preliminary announcement for its fourth-quarter 2024 results, offering investors an early look ahead of the company’s scheduled earnings release next week. The preannouncement revealed a sharp miss on both the top and bottom lines, reflecting significant charges and operational challenges. However, the muted reaction in the stock price suggests that investors were already braced for a difficult quarter and are focusing on Boeing’s future recovery trajectory.

The company reported an expected revenue of $15.2 billion for the quarter, well below Wall Street’s consensus estimate of $16.8 billion and a sharp decline from $22 billion in the same period last year. Boeing also forecasted a substantial loss per share of $5.46, far wider than the analyst estimate of a $1.73 loss. Free cash flow was a negative $3.5 billion, slightly better than the expected negative $4.1 billion. Despite these results, Boeing shares were down only 1.5% in premarket trading, signaling that the market had already anticipated these weak numbers.

Key drivers of the performance were attributed to charges in both the Commercial Airplanes (BCA) and Defense, Space & Security (BDS) divisions. In the Commercial Airplanes segment, Boeing indicated revenue of $4.8 billion, in line with expectations, but an operating loss of $2.1 billion due to $1.1 billion in charges related to the IAM labor agreement and elevated supplier costs. Notably, the 777X and 767 programs accounted for much of this charge, with cash impacts expected to stretch through the mid-2030s.

The Defense, Space & Security segment faced even greater challenges, with revenue of $5.4 billion falling short of the $6.5 billion consensus. The division reported an operating margin of -41.9%, with $1.7 billion in pretax charges linked to the KC-46A, T-7A, VC-25B, Commercial Crew, and MQ-25 programs. These charges stemmed from higher anticipated costs associated with manufacturing and program execution, alongside ripple effects from the IAM labor agreement. Analysts noted that this segment’s losses were a key negative point, though many on the buyside had already expected charge risks.

Boeing CEO Kelly Ortberg emphasized the company’s efforts to stabilize its business despite near-term challenges. “We took important steps during the quarter, including reaching an agreement with our IAM-represented teammates and restarting production on key programs like the 737, 767, and 777/777X,” Ortberg said. Boeing also maintained its timeline for the first delivery of the 777-9 in 2026, indicating progress on its key development programs.

The muted market reaction to the disappointing results reflects a degree of investor optimism about Boeing’s longer-term prospects. The company’s stock, which has rallied nearly 29% since its 2024 lows in mid-November, declined only 1.5% in premarket trading. Analysts suggest this resilience may stem from a belief that the worst of Boeing’s production and safety challenges are behind it, with the focus now shifting toward operational recovery and increasing aircraft deliveries. Boeing delivered 348 planes in 2024, a significant miss from the 700 initially forecasted but a foundation for recovery in 2025, with Wall Street expecting 550 deliveries and a return to profitability.

Looking ahead, Boeing’s challenges remain steep, but its opportunities are substantial. The company’s order backlog and continued strong demand for commercial aircraft position it for growth as it works to resolve production bottlenecks and improve operational efficiency. Analysts remain cautiously optimistic, with Deutsche Bank maintaining a Buy rating and a $215 price target, underscoring potential upside if Boeing can deliver on its recovery initiatives.

Overall, while Boeing’s Q4 results underscored the depth of its current challenges, the muted stock reaction suggests that investors are looking past this quarter and toward a brighter future. The company’s ability to manage costs, improve production efficiency, and rebuild trust with regulators and customers will be key to sustaining its recovery trajectory in 2025 and beyond.