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“Could a Breakup Save Boeing? Expert Insights on Restructuring Amid a 47% Drop in Investor Wealth”

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Call for Change: The Push to Break Up Boeing

Osman Proposes Split of Aerospace Giant: The founder of The Edge, Jim Osman, is advocating for a complete separation of planemaker Boeing Co BA.

Osman shared his views with Barron’s, suggesting that Boeing should divide into its three primary sectors: commercial aerospace, defense, and services. He believes that shareholders deserve faster results and are anxiously awaiting the creation of value.

“It’s time for Boeing’s management to wake up and start creating value,” Osman stated. “The clock is ticking on [management’s] job security, and shareholders aren’t waiting forever.”

The Edge focuses on uncovering “hidden corporate value.” Osman claims that if a breakup occurs, Boeing could see a 100% increase in its stock value.

The Current Situation: Boeing has struggled with numerous challenges since late 2018, when one of its aircraft tragically crashed into the ocean near Indonesia. Recently, in January 2024, a safety issue arose when a door panel detached from an Alaska Airlines plane manufactured by Boeing, raising further alarms. The financial troubles intensified during the Covid-19 pandemic.

As of now, Boeing’s stock has decreased by 47% over the past five years and by 14% in the last year, according to data from Benzinga Pro.

The new CEO, Kelly Ortberg, has implemented strict measures, including layoffs and capital raises, since taking over in August. However, a breakup of the company has not been officially discussed.

In the third quarter, from July to September, Boeing reported a core operating loss of $5,989 million, an increase from $1,089 million during the same period last year. The Global Services division was the only profitable area, generating $834 million in earnings from operations.

On the other hand, the Commercial Airplanes and Defense, Space, and Security segments faced significant losses of $4,021 million and $2,384 million, respectively.

Boeing currently holds a consensus price target of $197.89, based on evaluations from 22 analysts tracked by Benzinga. Research firms like Barclays, Deutsche Bank, and JP Morgan provided their latest ratings on January 6, January 2, and November 25, suggesting a potential upside of 19.64%.

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Explore more insights from Benzinga’s Future Of Mobility coverage by following this link.

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