A Very Good Month For Boeing
Sign with logo at entrance to office of aerospace company Boeing. (Photo by Smith ... More Collection/Gado/Getty Images)
The past several weeks have been a welcome change for Boeing, which has struggled for the past seven years with fatal crashes, a pandemic travel shutdown, quality and safety incidents halting production and a labor strike that pushed the company to the brink.
However, after nine months on the job, CEO Kelly Ortberg's recovery plan is showing strong progress.
On April 22, Boeing announced the sale of Jeppesen, which provides digital navigation services, for $10.55 Billion to private equity firm Thoma Bravo. The move was part of a plan by Ortberg to divest 'non-core' assets. Jeppesen is the premier provider of navigation charts and aids to airlines, business jets, military aircraft and general aviation and was expected to prompt a heated auction, which it did.
The unit had many attributes which make prospective buyers salivate - steady cash flow driven by subscription revenue, strong reputation, a highly diversified customer base and a near monopoly position in the market. Thoma Bravo, which specializes in software driven entities, will have pricing power to juice returns over time.
Private equity firms TPG, Veritas and Advent International were all reported to have bid for the unit which went on the block at the end of last year. In the end, the price was far above expectations of approximately $6 Billion penciling out in the end at 16 times 2025 earnings before interest, taxes, depreciation and amortization.
It is estimated that the proceeds will reduce Boeing's net debt by 14% improving the company's balance sheet, Boeing bought the unit for $1.5 Billion in 2000 and was able to maintain its market neutrality even with airlines which flew Airbus or aircraft from competing OEM's.
A Boeing 787 Dreamliner belonging to XiamenAir takes off from Sydney's Kingsford Smith Airport on ... More May 12, 2020 in Sydney, Australia.
Then on May 12, China authorized resumption of Boeing aircraft deliveries that had been held hostage in the tariff wars amid scaling back of the China specific tariffs of 145%. Through the remainder of the year 50 aircraft are slated for delivery to China worth approximately $1 Billion. China has over 500 Boeing aircraft still on order, representing approximately 10% of Boeing's backlog.
Meanwhile, Boeing's production of aircraft continues to build. In April, Boeing delivered aircraft at roughly twice the rate of a year ago (30 737's versus 16 in 2024, 8 787's versus 4 in 2024). May continues to show similar progress.
Boeing has a near term goal of 38 737'a per month at which point the FAA will assess whether production can move to higher rates. The 737 is crucial to Boeing's recovery as a rate increase to those levels begins to produce positive cash flow.
ABU DHABI, UNITED ARAB EMIRATES - MAY 15: U.S. President Donald J. Trump meets with UAE President ... More Sheikh Mohamed bin Zayed Al Nahyan during a visit to Qasr al Watan (Palace of the Nation) on May 15, 2025, in Abu Dhabi, United Arab Emirates. Trump is on the third day of his visit to the Gulf to underscore the strategic partnership between the United States and regional allies including the UAE, focusing on security and economic collaboration. (Photo by)
Then Trump's trip to the mid East produced record orders from Qatar, United Arab Emirates and Saudi Arabia. For a President fixated on restoring manufacturing jobs and bolstering the economy, aerospace is a critical component to US balance of trade and high value added manufacturing. After the roller coaster of tariff pronouncements, the deals provided a needed boost to backlog and confidence.
As part of the $1.2 Trillion deal between the US and Qatar, Qatar Airways ordered 210 aircraft (130 787's, 30 777-9's and an additional 50 options of the two types). It was the largest ever widebody order from a single operator and was the airline's largest order in history. These were in addition to 197 Boeing aircraft it already had on order.
Etihad Airways, based in the UAE, ordered 28 787's and 777X's. Up until now, Etihad has maintained a relatively even mixed fleet of 105 aircraft split between Boeing and Airbus. This order will push them to be more oriented to Boeing if Airbus does not score a similar order.
AviLease, an aircraft lessor based in Saudi Arabia, placed its first order from Boeing. Unlike Qatar and Etihad, this order was all for the narrowbody 737 MAX 8 and 10, which are in high demand and more easily placed in airline fleets. The order was part of a $60 Billion deal by the Saudis to invest in the United States.
Despite this progress, Boeing still faces many challenges including regulatory approval for the 737 MAX 7 and 10 and the 777X. United, one of the earliest customers for the MAX 10 may shift its orders for the aircraft to other variants amid expected delivery delays of up to two years.
Nevertheless, Boeing looks forward to continued progress with other non-core assets being sold in the near future and completion of the re-acquisition of Spirit AeroSystems in the third quarter of this year.
Although the mid-East deals are unlikely to be repeated in the future, the tailwinds that have begun over the past month bode well for the country's largest exporter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News24
18 minutes ago
- News24
Huawei chips are one generation behind US, but ‘no need to worry', says CEO
Huawei Technologies' chips are one generation behind those of US peers but the firm is finding ways to improve performance through methods such as cluster computing, Chinese state media quoted CEO Ren Zhengfei as saying on Tuesday. The chipmaker invests 180 billion yuan (R444 billion) in research annually and sees promise in compound chips - chips made from multiple elements - Ren said in an interview with the People's Daily newspaper of the governing Communist Party. There is "no need to worry about the chip problem", Ren said, addressing concerns stemming from US export controls. The article, published on the front page of the newspaper, come as top US and Chinese officials are set to resume trade talks for a second day in London where topics such US tech restrictions on China are expected to be discussed. Since 2019, a slew of US export curbs, aimed at curbing China's technological and military advancements, have restricted Huawei and other Chinese firms from accessing high-end chips and the equipment needed to produce them from abroad. Ren's comments are the first ever from him or Huawei about the company's advanced chipmaking efforts, which have become a flashpoint in US-China tensions. Huawei is just one of many Chinese chipmakers, Ren said in the interview, adding: "The United States has exaggerated Huawei's achievements. Huawei is not that great. We have to work hard to reach their evaluation." "Our single chip is still behind the US by a generation. We use mathematics to supplement physics, non-Moore's law to supplement Moore's law and cluster computing to supplement single chips and the results can also achieve practical conditions. Software is not a bottleneck for us," he said. Cluster computing is when multiple computers work together. Moore's law refers to the speed of chip advancement. Huawei's Ascend series of AI chips compete in China with offerings from Nvidia, the global leader in AI chips. The US commerce department last month said the use of Ascend chips would be a violation of export controls. Nvidia's AI chips are more powerful than Huawei's but the company has been barred by Washington from selling its most sophisticated chips to China, causing it to lose significant market share to Huawei. In April, Huawei launched "AI CloudMatrix 384", a system that links 384 Ascend 910C chips in a cluster that companies can use to train AI models, which has been described by analysts as able to outperform Nvidia's GB200 NVL72 system on some metrics. Dylan Patel, founder of semiconductor research group SemiAnalysis, said in an article that month that it meant that Huawei and China now had AI system capabilities that could beat Nvidia. Nvidia and the US commerce department did not immediately respond to a request for comment on Ren's remarks. Ren also said about a third of Huawei's annual research spending went to theoretical research while the rest was spent on product research and development. "Without theory, there will be no breakthroughs, and we will not catch up with the United States."
The Verge
18 minutes ago
- The Verge
Posted Jun 10, 2025 at 4:15 AM EDT
Huawei plays coy on AI chips. Founder Ren Zhengfei says Huawei's Ascend chips are still 'one generation' behind US rivals like Nvidia, and that the 'US has exaggerated Huawei's capabilities — we're not that strong yet.' If that sounds an odd line for a CEO to take, remember that fears over Huawei's AI prowess have driven a US clampdown intended to boost Nvidia in its place, and that the US and China are negotiating today over export controls and more.
CNET
28 minutes ago
- CNET
Mortgage Rates Go Down Over the Last Week: Today's Mortgage Rates for June 10, 2025
Check out CNET Money's weekly mortgage rate forecast for a more in-depth look at what's next for Fed rate cuts, labor data and inflation. Despite forecasts of gradually falling mortgage rates, the housing market remains largely unaffordable for most prospective buyers. The average 30-year fixed rate has remained close to 7% for the last seven months, leading to cost-prohibitive monthly payments. The average interest rate for a standard 30-year fixed mortgage is 6.90% today, a decrease of -0.07% compared to one week ago. The average rate for a 15-year fixed mortgage is 6.11%, which is a decrease of -0.05% since last week. Further compounding the financial pressure on borrowers are high home prices and the skyrocketing cost of ownership due insurance and property taxes. Median family income has not kept pace with the surge in housing costs, requiring many households to earn double or triple their salary to afford a modest home in some cities. Meanwhile, the "lock-in" effect, where current homeowners with low-rate mortgages are reluctant to sell and take on higher interest rates, has kept housing inventory tight and fueled price competition in high-demand areas. Even if an economic slowdown compels the Federal Reserve to cut interest rates later this year, it's unlikely to alleviate the burden on buyers in an overheated market. A potential job-loss recession is also making more households cut back budgets and take on less financial risk. When mortgage rates start to fall, be ready to take advantage. Experts recommend shopping around and comparing multiple offers to get the lowest rate. Enter your information here to get a custom quote from one of CNET's partner lenders. About these rates: Bankrate's tool features rates from partner lenders that you can use when comparing multiple mortgage rates. What's behind today's high mortgage rates? The last few months have seen mortgage rates navigate a bumpy course. Persistent inflation, the looming threat of a global trade war and escalating recession fears have all contributed to an uncertain economic outlook. As a result, the Fed has adopted a wait-and-see approach when it comes to interest rate adjustments. After cutting borrowing costs three times last year, the central bank is keeping borrowing costs at their current range so far in 2025. Experts predict the Fed will hold rates steady again at its upcoming meeting on June 17-18. If President Trump eases some of his aggressive tariff measures or if the labor market deteriorates, it could prompt the Fed to resume easing interest rates in the fall, which would put downward pressure on bond yields and mortgage rates. Still, experts warn of a lot more volatility in the market. As a result, buyers are being more patient and strategic about financing, comparing different loan types and planning ahead. "Some are waiting, others are getting pre-approved now so they're ready to act if rates fall," said Jeb Smith, licensed real estate agent and member of CNET Money's expert review board. For a look at mortgage rate movement in recent years, see the chart below. Mortgage predictions for 2025 Despite hopes that 2025 would bring relief to the housing market, concerns over a potential recession and uncertain trade policies have kept longer-term bond yields and mortgage rates high. Mortgage rates are closely tied to the bond market, specifically the 10-year Treasury yield, which is sensitive to investors' expectations for inflation, labor data, changes to monetary policy and global measures like tariffs. "Rates could fall if inflation keeps cooling and the labor market softens," said Smith. "On the other hand, tariffs could create new inflation pressure. Add in government deficits and increased bond supply, and that puts upward pressure on rates." In short, it will be difficult for mortgage rates to drop below 6% without the risk of a job-loss recession. Fannie Mae now expects rates around 6.1% by the end of 2025 and 5.8% by the end of 2026. According to Smith, mortgage rates could move lower slowly and steadily, but numerous risks could keep rates elevated. Which mortgage term and type should I pick? Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront. 30-year fixed-rate mortgages The average interest rate for a standard 30-year fixed mortgage is 6.90% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you'll have a lower monthly payment. 15-year fixed-rate mortgages Today, the average rate for a 15-year, fixed mortgage is 6.11%. Though you'll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner. 5/1 adjustable-rate mortgages A 5/1 adjustable-rate mortgage has an average rate of 6.16% today. You'll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option. Calculate your monthly mortgage payment Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET's mortgage calculator below can help homebuyers prepare for monthly mortgage payments. Where can I find the best mortgage rates? Though mortgage rates and home prices are high, the housing market won't be unaffordable forever. It's always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right. Save for a bigger down payment: Though a 20% down payment isn't required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
