TLDR:
- Boeing set to report Q1 earnings with Wall Street expecting a per-share loss of $1.21
- Chinese tariffs of 125% have forced the return of Boeing jets intended for Chinese customers
- Boeing has missed earnings estimates in 19 of the past 44 quarters – unusual volatility
- The company faces multiple challenges: quality issues, labor strikes, and now trade wars
- As America’s largest exporter with 80% of jets going to foreign customers, tariffs pose serious threats
Boeing, the troubled aerospace giant and America’s largest exporter, reports first quarter earnings on Wednesday with investors hoping for fewer surprises than in recent quarters. Wall Street forecasts point to a per-share loss of $1.21 from sales of $19.6 billion, slightly worse than the $1.13 per-share loss from a year ago.
The company has been plagued by volatility, missing earnings estimates in 19 of the past 44 quarters according to Bloomberg data. That’s a stark contrast to Apple, which missed only three times in the same period.
Boeing’s average deviation from earnings estimates is a whopping 667%, compared to Apple’s 8%. This unpredictability has been a hallmark of Boeing’s recent performance.
Production Problems Persist
The first quarter saw Boeing deliver 130 commercial jets, up from 83 in the same period last year. Analysts expect full-year deliveries to reach about 580 jets, a significant improvement from the 348 delivered in 2024.
Last year’s production was hampered by both a labor strike and serious quality problems. The most notable incident occurred on January 6, 2024, when an emergency door plug blew out of a 737 MAX 9 during an Alaska Air flight.
The investigation revealed the problem wasn’t with Boeing’s Malaysian supplier but with Boeing itself, which failed to replace four bolts needed to keep the door plug in place.
Production turnaround will take time. Boeing would like to be making close to 600 737 MAX jets annually, but output has been closer to 300 per year since 2021.
Tariff Troubles Mount
As if Boeing didn’t have enough problems, trade tensions are creating new headaches. Chinese customers face a 125% tariff on US imports, retaliation for America’s 145% tariff on most Chinese imports.
The impact became clear over the weekend when two Boeing planes were returned to Seattle from China rather than going to their intended Chinese customers.
This could be just the beginning of Boeing’s trade problems. China represents the largest and fastest-growing market for commercial jets, expected to purchase 8,830 new planes over the next 20 years – 10-15% of global demand.
Trade tensions have already caused Boeing to lose market share in China to European rival Airbus. Chinese customers ordered 122 Boeing planes in 2017-2018, but only 28 in the six years since, mostly freighters or orders from leasing companies.
Boeing hasn’t reported a single order for a passenger jet from a Chinese airline since 2019.
Supply Chain Vulnerability
Beyond sales challenges, Boeing faces potential manufacturing disruptions. The company relies on foreign-made parts for about 80% of its planes’ content, according to CEO Kelly Ortberg’s recent congressional testimony.
The 787 Dreamliner, Boeing’s most valuable and expensive plane, uses wings from Japan. Finding new American suppliers would be extremely difficult, as each new part would require Federal Aviation Administration recertification – a process that can take over a year.
Foreign parts with added tariffs would raise the cost of building an already expensive $50-100 million aircraft by millions more. It’s unclear whether any Boeing customer would be willing to absorb these additional costs.
Boeing certainly can’t afford to. The company hasn’t reported a full-year profit since 2018, accumulating $51 billion in operating losses since then. Another loss is expected when it reports Wednesday.
Boeing’s importance to the US economy can’t be overstated. Despite its troubles, the company estimates it supports 1.6 million jobs directly and indirectly, including nearly 150,000 of its own employees.
The company has a substantial backlog of orders from Chinese airlines – 195 planes, plus orders for 678 additional planes from unidentified airlines, many of which could also be from China.
While Boeing might find alternative buyers for canceled Chinese orders given its multi-year global backlog, additional countries implementing tariffs would create much bigger problems.
Options markets suggest Boeing shares may move about 5% up or down following earnings. The stock has moved an average of about 2% after the past four quarterly reports, rising twice and falling twice.
Coming into Wednesday’s trading, Boeing stock was down about 8% year to date, roughly in line with the 8% decline in the Dow Jones Industrial Average.
