Source: PaxForex Premium Analytics Portal, Fundamental  Insight

Boeing's revenue is melting in front of our eyes as the 737 Max delivery is suspended while the coronavirus is pushing for air travel. But U.S. regulators have approved the return of the 737 Max in operation. So is it worth buying Boeing shares now?

Boeing reported a loss of $1.39 per share in the third quarter. But still, it exceeded Wall Street's expectations of 2.33 dollars per share.

Revenue declined 13 percent on average over the past three years. Boeing reported a 29 percent drop in revenue to $14.14 billion in the third quarter, but it also surpassed analysts' estimates. Commercial aviation revenue fell 56 percent to $3.6 billion "due to a decline in shipments, primarily as a result of the impact of the Covid-19, as well as quality problems with the 787 and related refinements.

Boeing's shipments decreased by 55 percent to 28 aircraft, as 737 Max remained at a standstill. Net operating cash flow in Q3 amounted to USD 4.82 billion. It is more than twice as much as a year ago but improved from $5.3 billion in the second quarter.

On October 6, Boeing reduced its 10-year forecast of demand for aircraft in the industry by 11 percent compared to last year to 18,350 commercial aircraft due to the pandemic.
Boeing's defense and space business also faced negative news. The KC-46 tanker for the U.S. Air Force is more than two years behind schedule. And it cost Boeing more than $4.7 billion for overspending after it paid $67 million in the third quarter.

Among other things, Boeing is counting on foreign military projects. It is reported that the United Arab Emirates will receive Boeing EA-18G Growler aircraft as part of the U.S. arms deal after the normalization of ties with Israel. The improvement of ties between Israel and other U.S. allies in the Middle East could lead to new deals.

But don't forget that problems with automated flight control software created with the help of the maneuverability enhancement system led to the catastrophe of Ethiopian Air in March 2019, as well as to the catastrophe of Lion Air in October 2018. Together, these two accidents claimed the lives of 346 people.

It was assumed that 737 Max would temporarily stay on the ground for 20 months, which cost the last CEO of his work. In December, the board of directors dismissed Dennis Muilenburg as Boeing CEO amid criticism of his response to the 737 Max crisis and scoldings by regulators for insisting on an early return to service of the problem jet. Production of the Boeing 737 Max was shut down in January and resumed in May.

The FAA approved the return of the aircraft to operations last week. But there are some requirements that carriers must meet before they can include the 737 Max in their schedule, including software upgrades and wire split modifications, as well as pilot training.

Patrick Ky, executive director of the European Union's Aviation Safety Agency, told Bloomberg that the agency is reviewing final documents before issuing the airworthiness directive in November. But it may take longer for individual airlines to get Max back into service in Europe, as each airline will have to plan maintenance and training before it can be put back into service.
Transport Canada completed the Boeing 737 Max simulator and test flights at the end of August, which is another step towards putting the jet back into service. But Canadian regulators are postponing approval of the 737 Max and will continue the independent validation process.

American Airlines announced in October that it would fly the Boeing 737 Max daily between Miami and New York City from December 29 to January 4. Passengers can start booking their flight on October 24. Southwest Airlines does not plan to start flying its 737 Max again until at least 2021, and United Airlines expects its aircraft to start flying again in Q1.
It is quite logical that the ban on the operation of MAX, the suspension of deliveries, and the shutdown of production were expensive. Combined with expenses planned last year, the costs associated with the 737 Max are currently approaching $20 billion.

According to reports, a Securities and Exchange Commission is investigating the financial disclosure of the aerospace giant in connection with the 737 Max flight ban.
Congress, the Ministry of Justice, the FBI, and the Office of the Inspector General of the Ministry of Transport are also trying to find out if the Dow Jones giant has provided misleading information about the Boeing 737 Max to regulatory authorities and customers.

Based on the data received from regulators in the MCAS system, the Department of Justice received a new request focusing on quality control issues at Boeing factories, sources in the Wall Street Journal said in April.

At a transport hearing in October 2019, members of the House unloaded a pile of devastating new reports that included warnings from employees before fatal accidents. And at a hearing of the House Transport and Infrastructure Committee in December, a former Boeing employee testified that he had warned management about problems with the 737, noting that overworked employees were making mistakes.

The flight ban on the Boeing 737 Max was lifted in the U.S., but most airlines removed it from the schedule until early next year. The Covid-19 strikes a blow to world air traffic, suppressing the already weakened demand for the 787 wide-body aircraft. Positive news about the Covid-19 vaccine helps the stocks, but it is unclear when the vaccine will be widely available and how long it will last.

After the epic free-fall, BA stocks rose slightly, pushing beyond the 50-day and 200-day lines. The stocks form a new base but remain below the buy point.
Revenues are likely to remain under pressure for some time, as the International Air Transport Association, sees no rebound to the level of 2019 until 2024.

While the price is above 185.10, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 211.53
• Take Profit 1: 241.20
• Take Profit 2: 254.70

Alternative scenario:

If the level 185.10 is broken-down, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 185.10
• Take Profit 1: 163.70
• Take Profit 2: 150.80