Boeing tanks on poor outlook for new planes
NEW YORK — Boeing doesn’t expect to deliver as many jets in 2016 as it did last year. Wall Street reacted like a drunk first class passenger succumbing to a fit of air rage.
Shares of Boeing tumbled 7% Wednesday.
Boeing had a record year in 2015, delivering 762 commercial airplanes to airlines and freight companies around the world. That’s up 5% from 2014.
But Boeing expects to deliver between 740 and 745 new planes this year.
As a result, Boeing said that overall sales for 2016 will likely be lower than they were in 2015. Boeing also slashed its earnings outlook to a range well below what analysts were expecting.
Demand for its iconic 747 is slowing, particularly in the cargo market. Boeing took an $885 million charge in the fourth quarter to reflect that.
But Boeing didn’t give any specific reasons in its earnings release for why it was now expecting demand for its planes to fall.
The stunning drop in oil prices is probably partly to blame. While lower oil prices are good news for many airlines, they have also raised concerns about a global economic slowdown.
But CEO Dennis Muilenburg sounded optimistic during a conference call with analysts Wednesday afternoon.
He noted that the company still has a strong backlog of orders for planes and that the global economy should still be healthy enough to support solid growth in the airline industry.
Still, there was evidence of weaker demand already in the fourth quarter. Boeing delivered 182 planes in the last three months of the year, a nearly 7% decline from the fourth quarter of 2014.
The softness was across the board too — deliveries fell for Boeing’s 737, 777 and 787 Dreamliner planes.
Boeing’s stock has now plunged almost 20% this year. European rival Airbus is struggling well. Its shares fell 3% in trading on exchanges in Paris and Frankfurt on Wednesday and are down more than 10% this month.