's (NYSE: BA) recent second-quarter earnings report contained good and bad news, and there's plenty of food for thought for incoming CEO Kelly Ortberg. Does the good news outweigh the bad enough to make the aerospace giant a stock worth buying in the hope of a recovery? Here's one view.
If there's one single metric that Boeing investors need to follow, it's the delivery rate on the Boeing 737 MAX. As most investors know by now, Boeing had to slow down production and, in turn, deliveries to improve manufacturing quality following multiple high-profile incidents over the past few years. The most recent of which was the Alaska Airlines flight where an emergency exit door blew off mid-flight.
It's a significant issue for Boeing because airplane production is a high-fixed-cost activity. As such, a slowdown in delivery rates means revenue falls and is accompanied by severe margin pressure. Indeed, Boeing's commercial airplanes (BCA) operating margin declined to a negative margin of 17.4% in the first half (on 175 total airplane deliveries) of 2024, compared to a negative margin of 6.4% in the first half (on 266 total airplane deliveries) of 2023.
Source Fool.com