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Boeing’s financial problems continue as families of crash victims call on the US to sue the company
Boeing said on Wednesday it lost $355 million as revenue fell in the first quarter, another sign of the crisis gripping the aircraft maker as it faces increasing scrutiny over the safety of its planes and accusations of shoddy work from a growing number of whistleblowers.
CEO David Calhoun said the company is in “a difficult time” and its focus is on solving its manufacturing problems, not the bottom line.
Company executives have been forced to talk more about security and less about finances since a door was closed. exploded from a Boeing 737 Max during an Alaska Airlines flight in January, leaving a hole in the plane.
The accident halted the progress Boeing appeared to be making as it recovered from two fatal accidents of Max jets in 2018 and 2019. The crashes in Indonesia and Ethiopia, which killed 346 people, are also now back in the spotlight.
About a dozen relatives of passengers who died in the second crash met with government officials for several hours Wednesday in Washington. They asked employees to revive a criminal fraud charge against the company, ruling that Boeing violated the terms of a 2021 settlement, but left disappointed.
Boeing officials made no mention of the meeting, but spoke repeatedly as they discussed quarterly results from a renewed focus on safety.
“While we release first quarter financial results today, our focus remains on the comprehensive actions we are taking following the crash of Alaska Airlines Flight 1282,” Calhoun told employees in a memo Wednesday.
Calhoun listed a series of actions the company is taking and reported “significant progress” in improving manufacturing quality, much of it through slowing production, which means fewer planes for its airline customers. Calhoun told CNBC that more rigorous inspections resulted in 80% fewer failures in airframes coming from major suppliers Espírito AeroSistemas.
“In the short term, yes, we are in a difficult time,” he wrote to employees. “Lower deliveries can be difficult for our customers and our finances. But safety and quality must and will come above all.”
Calhoun, who will resign At the end of the year, he once again said that he was fully confident in the company’s recovery.
Calhoun became CEO in early 2020 as Boeing struggled to recover from the Max crashes, which led regulators to ground planes worldwide for nearly two years. The company thought it had avoided any risk of criminal prosecution when the Department of Justice agreed not prosecute the company for fraud if it complied with US anti-fraud laws for three years – a period that ended in January.
Boeing has reached confidential settlements with the families of passengers who died, but families of those killed in the crash in Ethiopia continue to pressure the Justice Department to sue the company in federal district court in Texas, where the settlement was filed. On Wednesday, department officials told relatives that the agency is still considering the matter.
Upon leaving the meeting, Paul Cassell, a lawyer for the families, called it “all for show.” He said the Justice Department appears determined to defend the deal it negotiated in secret with Boeing.
“We simply want the case to move forward and let the jury decide whether Boeing is criminal or not,” he said.
It was an emotional meeting, according to Nadia Milleron, whose daughter Samya Stumo died in the 2019 accident.
“People are angry. People are screaming. People are starting to talk about other people,” said Milleron, who watched online from her home in Massachusetts while her husband attended in person. Relatives believe the Justice Department is “ignoring a mountain of evidence against Boeing. It’s mysterious,” she said.
According to Milleron, the head of the fraud section of the Justice Department’s criminal division, Glenn Leon, said his agency could extend its review beyond this summer, seeking a trial against Boeing on charges of defrauding regulators who approved o Max, or ask a judge to dismiss the charge. She said Leon made no commitments.
The Justice Department declined to comment.
A federal judge and an appeals court ruled last year that they did not have the power to overturn the Boeing deal. Families of crash victims had hoped the government would reconsider its lawsuit against Boeing after the Alaska Airlines plane’s door plug exploded on Jan. 5 as the plane flew over Oregon.
Investigators looking into the Alaskan flight say screws that help hold the door cover in place were missing after repairs at a Boeing factory. The FBI told the passengers they might be crime victims.
Boeing shares have plunged by about a third since the explosion. The Federal Aviation Administration Boeing Co. has stepped up its oversight and given Boeing until the end of May to produce a plan to fix manufacturing problems with the 737 Max jets. Airlines customers are unhappy about not receiving all the new planes they ordered due to delivery disruptions.
The company said it paid $443 million in compensation to airlines for grounding Max 9 jets following the Alaska crash.
Several former managers and one current manager have reported numerous problems in the manufacturing of the Boeing 737 and 787 jets. The most recent, a quality engineer, told Congress last week that Boeing is taking manufacturing shortcuts that could eventually cause the planes to break. 787 Dreamliners. Boeing retreated aggressively against their claims.
Boeing, however, has a few things going for it.
Along with Airbus, Boeing forms one half of a duopoly that dominates the manufacture of large passenger planes. Both companies have years of backlogs from airlines eager for new, more fuel-efficient planes. And Boeing is a major defense contractor for the Pentagon and governments around the world.
Richard Aboulafia, a longtime industry analyst and consultant at AeroDynamic Advisory, said that despite all the setbacks, Boeing still has a powerful mix of high-demand products, technology and people.
“Even if they are No. 2 and have major problems, they are still in a very strong market and an industry that has very high barriers to entry,” he said.
And despite huge losses – around $24 billion in the last five years – the company is not in danger of going bankrupt, Aboulafia said.
“This is not General Motors in 2008 or Lockheed in 1971,” Aboulafia said, referring to two iconic companies that needed huge government bailouts or loan guarantees to survive.
All of these factors help explain why 20 analysts in a FactSet survey rate Boeing stock as a “Buy” or “Overweight” and only two have “Sell” ratings. (Five have “Hold” ratings.)
Boeing said its first-quarter loss, excluding special items, was $1.13 per share, which was better than the $1.63 per share loss forecast by analysts, according to a survey by Boeing. FactSet.
Revenue fell 7.5% to $16.57 billion.
Moody’s downgraded Boeing’s unsecured debt by one notch to Baa3, the lowest investment grade rating, citing the weak performance of the commercial plane business.
Boeing Co. shares closed down 3%. They have fallen 34% since the explosion in Alaska.
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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