News and analysis

The tongue ever turns to the aching tooth, and so I am always in a search for any fresh negative information about Boeing Corporation (BA). As you well know, I have conceived a long-term bullish position in Boeing's major rival Airbus (AIR) since the beginning of 2024, later complemented by a more risky idea of short-selling directly on Boeing stock. I waited for the moment when the trading deal with Boeing proved to be effective, following the official US FAA (Federal Aviation Administration) announcement on investigating another whistleblower's claims that the aircraft manufacturer allegedly ignored reported safety or quality warnings when continuing a mass production of its 787 and 777 jets. As a result, the share price of Boeing lost nearly 2% this Wednesday to set another anti-record since at $174.63 on daily closing price since late November of 2022. The lowest intraday point was below $172.50. Now I am riding my hobby horse again by sharing the details of Boeing's potentially growing reputational concerns, which strongly affected supply orders.

A January 5 panel blowout on a 737 MAX plane served as a faint warning compared to Boeing engineer Sam Salehpour's testimony before the FAA commission. The man already witnessed challenges like threats and exclusion from working meetings, after he "identified engineering problems that affected the structural integrity of the jets", adding that Boeing "employed shortcuts to reduce bottlenecks" during 787 assembly, according to his attorney's comments to Reuters. Previously, the FAA had to investigate quality problems and manufacturing flaws for the same 787 model, which led Boeing to halting deliveries of this jet for more than a year in 2021-2022. At that time, Boeing management admitted some 787 planes had shims of improper size for filling tiny gaps with areas violating skin-flatness specifications. Yet, the engineer Sam Salehpour insists that further assembly process made an "excessive stress on major airplane joints. As two examples, "embedded drilling debris" was allegedly found by him on more than 1,000 planes, while some misalignment problems in the 777 jets were remedied by using force, so that he "literally saw people jumping on the pieces of the airplane to get them to align".

"Voluntary reporting without fear of reprisal is a critical component in aviation safety," the FAA only commented after the meeting with the whistleblower. Sometimes conciseness may tell more than verbosity. As to the professional community of engineering employees, called SPEEA, it just identified him as a member who works at Boeing's plant in Washington. In combination with a strange “suicide” of another Boeing's accuser, John Barnett, the story continues to cast a shadow on the giant company's working processes on assembly of popular jets. A Senate investigation subcommittee is scheduled to hold a hearing with Salehpour in about a week, on April 17. The issue is titled "Examining Boeing's Broken Safety Culture: Firsthand Accounts''. Boeing CEO Dave Calhoun recently said he is going to step down by the end of 2024, and he would supposedly testify at a hearing. The top Republican members on the panel said their goal is "to provide Boeing the opportunity to explain to the American people why, in light of recent apparent safety failures, the public should feel confident in Boeing's engineering and assembly processes''. "Rather than heeding his warnings, Boeing prioritized getting the planes to market as quickly as possible, despite the known, well-substantiated issues he raised," Salehpour's lawyers said in their statement a couple of days ago.

On a parallel course, the U.S. Department of Justice said it is trying to find out whether Boeing violated a 2021 settlement that allowed the company to avoid responsibility on a charge of "conspiring to defraud the FAA" after two fatal crashes in 2018 and 2019. Nothing looks easy for Boeing now. Its delivery numbers plunged nearly by half YoY, as of the end of March. As the investigations are protracted, the market crowd is not eager to dig up Boeing shares from the hole it entered mostly by its CEOs' inaction and silence. Technically, the accomplished failure under the thin ice of a former $180 support would lead to a test of an area around $150 per share, which I feel as still a good chance for earning money on holding short sell positions on Boeing. The next possible target could be around $125, corresponding to the very lows of 2022.

Meanwhile, Airbus shares moderately retreated from its recent all-time peaks, yet its management confirmed confidence in airplane output forecasts. The European competitor of Boeing is getting additional orders from all those airlines, which need to continue post-covid recovery. Nothing new or very special except that Airbus reported 142 deliveries in Q1, being closer to the way to an annual delivery target of 800 aircrafts. Single-aisle production volume is below planning levels at around 50 planes a month, but the manufacturing process is going to be accelerated to reach 75 a month in 2026, the company's chief executive Guillaume Faury confirmed.

Despite the major broad market barometer on Wall Street (US500) lost more than one percentage point in the U.S. Eastern time midday on April 10, simply because of some higher-than-expected consumer price data, the shares of Delta Air Lines (DAL) jumped by 4% soon after the opening bell and lost their heat only when the core group of other stocks surrendered under the pressure of inflationary agenda. Unfortunately, the U.S. Consumer price index (CPI) added another 0.4% on a monthly basis to a 3.5% YoY, against a 3.2% in the previous month and a 3.4% of consensus growth expectations. Of course, this raised concerns of possible postponing the Fed's interest rates cuts. The FedWatch Tool on the Chicago Mercantile Exchange (CME) now shows a 95% chance of holding borrowing costs unchanged within its historically high 5.25-5.50% range in May and a 81.5% probability of the same scenario for the U.S. central bank meeting on June 12. The majority of futures traders are betting for September 18, meaning the date of the first interest rates cut. As a result, the S&P 500 futures washed up on the shore below 5,150 points after pretending to approach 5,300 only several days before. Meanwhile, Delta (DAL) pioneered first quarter earnings to the audience, and the reported numbers partially changed air travel segment sceptics’ perception. The report clearly deserves attention, as it has by far surpassed the expert pool forecasts, posting Q1 EPS (earnings per share) at $0.45 vs supposed $0.34. This is a sign of squeezing more-than-feared money from even a declining revenue of $12.6 billion, compared to $14.3 on average in the previous three quarters. The first quarter is usually an air pocket every year for the entire industry, yet Delta was able to collect 6.8% more than in Q1 2023, when it gained only $0.25 of pure income per share on an $11.8 billion of revenue. The first quarter of 2022 gave Delta a $1.23 loss in EPS on only $9.35 billion in sales. This actually marked the best ever Q1 in Delta's history.

From the outer point of view, Delta is progressing fine, so that financial improvements are evident. Besides, the company's own projected revenue for the upcoming April to June quarter is hitting records. Delta CEOs said they are waiting for "a mid-teens operating margin", with an EPS of $2.20 to $2.50 and targeting their brave EPS outlook of $6.00 to $7.00 for the full year of 2024, vs a consensus of $6.46. Free cash flow is anticipated at $3 to $4 billion, which also looks positive. A stronger recovery path of the business pushed some analyst houses, including Citigroup, to admit that Delta performance was encouraging. "These results should support Buy-rated Delta Air Lines’ shares on Wednesday morning," Citi wrote in a client note, adding that it allows the investment group to identify Delta as "its preferred US carrier." City analysts got a $55 price target on the stock, vs a $47 area reached after the intraday retracement.

At least, a breakthrough well above the $50-52 resistance for the last 12 months looks an almost inevitable scenario. It also sounds reasonable to expect at least a short-lived re-test of a pre-covid all-time high at $63.44, because inflation sets new standards for share pricing in many cases.

Tron (TRX) has seen a modest rise of 0.7% this week, reaching $0.1209, with earlier gains peaking at 3.1% when the token briefly climbed to $0.1240 on Wednesday. However, much of these gains were eroded amidst broader market downturns.

In contrast to Bitcoin's 15.5% gain in March, Tron experienced a 13.0% loss during the same period, reflecting its underperformance exacerbated by regulatory pressures from the U.S. Securities and Exchange Commission (SEC). The token dipped below the $0.1200 support level, hitting $0.1098 on March 20, before partially recovering from its losses.

There are no good news for Tron. Its founder Justin Sun it trying to create some alternative news speculating around AI issues. He was also asking the U.S. Court to Dismiss SEC lawsuit.

Investors may find solace in the hope that the $0.1200 support level holds, especially if no additional pressures are exerted on the crypto market. In such a scenario, Tron could potentially stage a recovery towards the $0.1400 resistance level.

Monero (XMR) is experiencing a 4.5% rise to $136.16 this week, with a minor pullback observed after reaching $140.34, marking a 7.5% increase on Tuesday. Notably, XMR is outperforming Bitcoin (BTC), which has only seen a 1.6% increase to $70,300 per coin.

During the recent crypto market correction at the end of March, XMR managed to hold above the support level at $125.00. Now, it's aiming for $150.00 in a bid to reclaim its established uptrend since June 18, 2022. While an initial attempt was made in March, the current effort appears more promising. Additionally, the Monero network is advancing with the Fluorine Fermi update.

The $150.00 barrier is viewed as robust and formidable. Surpassing it will pose a challenge, but if achieved, ambitious targets at $225.00 and beyond could be within reach.