Boeing (BA) Q3 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Dennis A. Muilenburg – Chairman, President & Chief Executive Officer

In Sum

“…we delivered solid operating results in both businesses, drove further productivity across the enterprise, captured significant contract awards, and continued to return cash to shareholders..”

Positive outlook going forward

“The continued strength of our overall market outlook is based on solid ongoing replacement demand and traffic growth. This year, passenger traffic growth is again outpacing GDP with AIADA reporting approximately 6% increase year to date. On the cargo side, the market is improved slightly, but year to date growth is modest at 1%…the overall market assessment today is a positive one if you take a long-term view. The 20-year market and the need for 39,600 new aircraft, that’s slightly up compared to last year’s current market outlook. So a robust long-term market. ”

Consolidations in the supply chain

“Some of the consolidation pressures that you’re seeing, I think it’s signs that our supply chain is working with us to try to be competitive and optimize their operations and continuing to invest for the future. So I see this as a healthy dynamic.”

High interest in the aerospace industry

“We continue to think aerospace as an industrial sector will outpace others, much of that driven by the commercial airplane marketplace and growing passenger traffic which is outstripping GDP so we’re not surprised that there’s a lot of interest in the aerospace sector.”

Hesitations in wide body

“there’s hesitation in the wide body marketplace right now as we think through a number of factors around the world. Slow GDP growth around the world, hesitation in cargo traffic, geopolitical questions. There are a number of factors that are causing our customers to be somewhat hesitant in wide bodies in particular.”

…growth in narrow bodies

“…while again it’s all in the context of some broad global economic concern, the ordering activity and the robustness of narrow body growth continues to be very clear, fueled by traffic growth. And as we said earlier, as we ramp up the 737 line to 57 a month, we continue to be oversold against that profile. And just as another data point, referrals and cancellations remain at historical lows, at about 1% of backlog. And load factors and utilization rates on aircraft fleets again remain generally very high compared to historical averages.”