The Boeing Company (NYSE: $BA) is a leading global aerospace company best known for commercial planes, defense systems, and space systems, and has customers in over 150 nations.
On Monday, March 25, 2024, Boeing CEO Dave Calhoun announced his retirement, stating that he would resign at the end of this year. The stock surged by more than one percent after this announcement.
Boeing’s Stock Surges Following CEO Departure Announcement
Dave announced his retirement due to the incident that happened to the Boeing 737 Max 9 plane in January.
During an Alaska Airlines flight from Portland, Oregon, on January 5, about nine minutes into the journey at 16,000 feet, the pilots had to do an emergency landing after a door plug blew out. This caused the cabin to lose pressure and created a hole in the side of the airplane. The incident could have led to a loss of life and has affected the company’s reputation around the world.
In a letter to Boeing shareholders, Calhoun described the Alaska Airlines flight as a “a watershed moment” for the company. He added, “We are going to fix what isn’t working, and we are going to get our company back on the track towards recovery and stability.”
Boeing’s Leadership Shakeup
Larry Kellner, the board chair, has also informed the board that he does not stand for re-election at the upcoming Annual Shareholder meeting. The board has chosen Steve Mollenkopf to take over from Kellner as the independent board chair. In this position, Mollenkopf will oversee the board’s efforts in selecting Boeing’s next CEO.
Commenting on the announcement, Ryanair’s CEO, Michael O’Leary, said, “We also look forward to continuing to work with Boeing chief executive Dave Calhoun and chief financial officer Brian West, and to helping Boeing recover its aircraft deliveries so that Ryanair can continue to grow strongly as Boeing’s number one customer here in Europe.”
BA Stock Update
BA stock was bullish on Monday, following the CEO’s announcement, rising 1% to 4% during the trading session. The shares closed trading 1.36% higher at $191.41 per share. On Tuesday, March 26, the stock sunk 1% during the afternoon trading session to $189.56, wiping away Monday’s gains.
Boeing’s current market cap is $115.621B, with an average trading volume of 10,276,149. In the past 52 weeks, the stock has underperformed the market, losing 6.61% of its value, compared to the 31.40% gain of the S&P 500 in the same period.Â
Is BA a Buy?
Boeing (BA) is currently working on the safety crises that have faced recently. However, the leadership changes may help to inspire confidence in the company. On the upside, Boeing still has a huge order backlog and no major cancellations.
However, there has been a gradual increase in downside risk at the company. Additionally, it has a huge debt profile, which could impact its ability to develop new planes. Consequently, a more prudent investment choice would be to buy stock in its supplies than the company itself. This would allow investors to gain exposure to the aviation industry while minimizing the downside risk of Boeing’s ongoing issues.
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