Boeing posts $1.2 bn deficit in first quarter, which is higher than predicted

Boeing reported a $1.2 billion loss in the first quarter, owing to huge write-downs and losses in both its civilian and defence aircraft sectors.

The loss exceeded Wall Street’s predictions, and the company’s quarterly sales also fell short of projections. Boeing depleted its cash reserves by $3.2 billion.

On CNBC, CEO David Calhoun admitted to a “messier quarter than any of us would have liked.”

Boeing Co. shares plunged as high as 12.6 percent after the opening bell on Wednesday, reaching a 52-week low, and were down 7% in noon trade.

However, Boeing expressed hope for the future, stating that it has submitted plans to begin 787 aircraft deliveries and that production and deliveries of the 737 Max passenger plane grew during the quarter.

Calhoun said the company was on target to achieve positive cash flow for the entire year “despite the pressures on our defense and commercial development programs.”

“This was another dreadful quarter from Boeing,” Robert Stallard, a longtime aerospace analyst who covers Boeing for Vertical Research Partners, said in a note to clients. “And what we think will really worry investors is that we keep getting MORE bad news.”

Boeing stockholders were disappointed by the quarterly report on multiple fronts.

The business has delayed the projected first delivery of a new version of its massive twin-aisle 777 passenger jet until 2025, five years later than expected. The delay was widely predicted as Boeing adjusts to new certification criteria in the wake of regulators’ approval of the Max, which was later forced to be grounded following two catastrophic disasters.

Boeing has estimated $1.5 billion in “abnormal” production costs for the 777-9, which is meant to transport more than 400 passengers on long-haul flights, due to the probable clearance delay. Boeing will cease manufacturing at least until the end of next year in order to prevent having to rework planes later.

Boeing announced a $660 million charge for its effort to build two new presidential Air Force One jets, which are specially modified Boeing 747s, blaming higher supplier prices and scheduling delays. It also charged $367 million on a military training plane. Boeing’s fixed-cost contracts with government customers are losing value due to inflation.

Boeing announced that it has submitted proposals to the Federal Aviation Administration to resume 787 passenger aircraft deliveries. Production concerns have prevented delivery for more than a year, resulting in a cost increase of roughly $2 billion, of which $312 million was recorded in the first quarter.

Airlines are anticipating a busy summer, with travellers returning in large numbers after a pandemic that lasted two years. However, some of them, such as American Airlines, have reduced their summer schedules due to the fact that they have yet to get the Boeing 787s that they ordered years ago.

“They have a busy summer schedule. We have already disappointed them with respect to the capacity on that summer schedule,” Calhoun said. Just when Boeing will be cleared to resume deliveries of 787s is up to the FAA, but Calhoun said “We will be back in the air sooner rather than later.”

In the current quarter, which runs through June, Boeing intends to increase 737 Max output to 31 planes per month. After two catastrophic crashes, the plane was grounded for over two years around the world.

Boeing also incurred pretax expenses of $212 million as a result of Russia’s invasion of Ukraine. Boeing has been forbidden from selling planes or providing services to Russian airlines due to sanctions imposed by the US and its allies.

Boeing is taking initiatives to improve long-term performance, according to a memo from Calhoun to staff.

“We are a long-cycle business, and the success of our efforts will be measured over years and decades, not quarters,” he said.

Boeing’s commercial-airplanes sector lost $859 billion, hampered by the company’s failure to produce 787 jets while it works to correct production issues.

The defence sector, which has historically been a bulwark against the instability of airline aircraft sales, lost $929 million as revenue plunged 24%.

The corporation recorded a $1.22 billion loss attributable to shareholders, up from $537 million the year before. On revenue of $13.99 billion, the “core” loss was $2.75 per share. According to a FactSet survey, analysts predicted a loss of 25 cents per share on revenue of $16.02 billion.

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