The Boeing Company: At the helm of the aviation industry

written on December 15, 2020

From launching the golden age of commercial aviation to powering NASA into space and helping the Pentagon win wars, Boeing has been at the helm of the aviation industry with its planes having journeyed into nearly every commercial airport in the world. Among the top global aircraft manufacturers, it is one of the largest American companies by revenue and a leading aerospace and defence contractor in the world.

Boasting a history brimming with both ups and downs, Boeing has demonstrated that it can adapt and evolve to face the challenges, while its strong financial numbers coupled with its top-notch team of engineers and scientists has helped it to push the flight limits. Now, as the prospect of faster than expected economic recovery on the back of a successful COVID-19 vaccine has led airline stocks to soar sharply, Boeing’s future may well be bright.

A brief history of Boeing

For Boeing it all began in 1909 when a wealthy lumber entrepreneur by the name of William Edward Boeing became infatuated with planes after seeing one at the Alaska-Yukon-Pacific Exposition in Seattle. A year later he purchased the Heath Shipyard which went on to become his first airplane factory and in 1916, the aviation pioneer established the company Pacific Aero Products Co, after he developed together with US Navy officer Conrad Westervelt, a single-engine, two-seat seaplane, the B&W.

Renamed Boeing Airplane Company in 1917, when the US entered World War I, the Navy purchased 51 out of the 56 ‘flying boats’ or Boeing Model C produced, making the model the company’s first financial success and paving the way to establishing a lasting partnership with the US military. Once World War I came to an end, the commercial airplane market was flooded with a bunch of cheap, used military planes which brought sales of new airplanes to a halt and drove many companies out of business. Not wanting to meet the same fate, Boeing began reaching beyond its aerospace roots by building dressers, counters and furniture, together with flat-bottom boats dubbed Sea Sleds, while it expanded into the airmail services.

Boeing went on to become a leader in the all-metal aircraft construction, setting the pace in the design revolution that took place throughout the 1930s with its well-known commercial aircrafts like the Model 247 twin-engine monoplane, the Model 314 flying boat, the Model 307 Stratoliner, the first airliner with a pressurised cabin and the 314 Clipper, the largest civilian aircraft of its time which featured dressing rooms and dining salons. Other popular planes included legendary bombers like the B-17 Flying Fortress and the B-29 Superfortress, both of which were key in the Allied war effort. By the spring of 1944, demand for Boeing military aircraft ramped up to such an extent that around 350 planes were built each month, most of which by women whose husbands had gone to war.

Following the Air Mail Act of 1934, Boeing split its airline assets becoming the forerunner of the modern United Airlines Holdings, while its western assets retained the Boeing name and continued to consolidate over the years. The next decades were marked by a string of new planes including the 707, 727 trijet and the 737 twinjet which became the world’s best-selling commercial plane by the end of the 20th century. The 1990s also ended with the largest merger in the aviation history when Boeing purchased McDonnell Douglas Corporation for more than $13 billion. The combined company employed around 200,000 employees, bringing total revenue in excess of $48 billion in 1997.

The new millennium was marked by the development of the 787 Dreamliner, a lighter and more efficient aircraft to its counterparts, while it signed the largest commercial aircraft order in its history, when Indonesia’s Lion Air ordered 201 of its 737 MAX and 29 of its 737-900ER airliners for $21 billion at list prices. Then, its much-anticipated 737 MAX was involved in two fatal crashes, one in late 2018 and the other in early 2019, which led to global regulators grounding the plane until recently.

Today, the company’s business units are organised under three main groups of products and services – commercial airplanes, military aircrafts and missiles, as well as space and communications. With a market cap as of December 2020 standing at $131.37 billion and enjoying a duopoly with Airbus in commercial aviation, Boeing has joined the ranks on both the Fortune 500 list and the Fortune Global 500 list with $76.6. billion in sales recorded despite the 737 MAX setback and the spread of COVID-19 affecting the entire aviation industry globally.

Fun fact

Boeing’s Everett Factory located in the Washington city of its namesake is considered the world’s largest building by volume at 13.3 million cubic metres and spanning a massive 98.7 acres. It even got listed in the Guiness World Records for being the most capacious building.

When did Boeing go public?

Boeing began trading on the New York Stock Exchange (NYSE) on January 1962, trading its shares for $0.8230 apiece. Most notably, the company has had a long history of stock splits that goes back 65 years. Between 1952 and 1977, the company’s stock split five times using a 2-for-1 split, whereas starting in 1979, the Boeing stock has been undergoing 3-for-2 splits. The latest split came in 1997 with a final 2-for-1 split. All these splits mean that an investor with around 100 shares would now own almost 36,500 shares post-split.

The aviation leader has been a solid blue-chip dividend stock throughout much of its history. Over the past six years, it has issued more dividends than 96.58% of other dividend-issuing US stocks, while it has been increasing its dividend for eight consecutive years. It marked annual increases of 50% in early 2014, 25% in 2015, 20% in 2016 and 30% in 2017, as well as a further 20% increases in 2018 and 2019 respectively. The company now pays a quarterly dividend of $2.055 with a current yield of 2.5%, however, in the wake of the COVID-19 pandemic back in March, it announced that it would stop paying its dividend temporarily.

How much would an investment in Boeing’s IPO would be worth today?

If you had invested in Boeing shares right after its IPO, a $500 investment would have bought about 607.5 shares. Presuming you had reinvested all dividends and taking into consideration all splits, the adjusted price on the first day of trading would have been that of $0.146, which means that you would now own more than 3,400 shares. As of November 15 2020, when Boeing’s share price closed at $371.68, your original $500 investment would now be worth a staggering $1.268 million. That’s a compound annual growth rate of more than 14%.

Is Boeing stock a buy right now?

Boeing has in recent years been one of the top-performing stocks, making the most of several favourable trends in the aerospace and defence industry. Its shares have gained more than 145% over the past three years, outpacing the S&P 500’s 44% gain, while the shares have been up more than 600% over the past 10 years. This rise has been mainly boosted by soaring orders for commercial aircraft and promising prospects for the military side of the business, both of which have pushed the Boeing stock above the $200 price mark.

However, following the crash of Ethiopian Airlines Flight 302, Boeing stock lost 11% of its value and by March of 2019, the stock had lost 18% of its value, which represented a $40 billion drop in market capitalization. Then, in early 2020, Boeing was trading at around $350 a share when the COVID-19 market crash sent its shares into a spiral, with the stock tumbling down to $89 per share.

Things took a turn for the better when news broke that the company’s 737 MAX got the all clear to fly again after 20 months on the ground. Since then, its stock has skyrocketed, going up more than 40% for the month as of November 23, just as most travel-related stocks have rebounded recently thanks to positive COVID-19 vaccine test results by the likes of Pfizer (PFE) and Moderna (MRNA), which have raised hopes for a return to normal economic activity and travel. With the plane’s engineering problems a thing of the past and the 737 off the ground, the stock is likely to trend higher.

Invest in Boeing (BA) with Moneybase Invest

Ready to buy a share in Boeing (BA), the largest global aircraft manufacturer? Download Moneybase Invest, the award-wining live trading platform powered by Calamatta Cuschieri from the Android or Apple App Store or visit from any browser to sign up.

Moneybase Invest is brought to you by Calamatta Cuschieri Investment Services Ltd and is licensed to conduct investment services business by the MFSA under the Investment Services Act.   
Moneybase Invest offers direct market access and speed of execution and is intended for knowledgeable and experienced individuals taking their own investment decisions. The value of investments may go up and down and currency fluctuations may also affect investment performance.  
The contents of this article are not intended to be taken as a personal recommendation to invest but strictly based on research and for information purposes only. Retail investors should contact their financial adviser for a suitability assessment prior to taking any investment decisions. 

Redefine the way you grow and manage your money today!

Life’s full of mysteries. Your money shouldn’t be one of them.

Redefine the way you grow and manage your money today!

Life’s full of mysteries. Your money shouldn’t be one of them.