Boeing delivered a quarterly report on Wednesday that surpassed expectations but continued to experience cash burn while striving to stabilize production in the aftermath of a significant incident involving a 737 Max aircraft earlier this year.
In the first quarter, Boeing’s cash burn amounted to $3.9 billion, outperforming both the company’s previous forecast and the expectations of Wall Street analysts, who had anticipated a cash burn of up to $4.5 billion during the same period.
In a message to employees on Wednesday, CEO Dave Calhoun, who announced his intention to step down by year-end in March, acknowledged the current challenges: “Near term, yes, we are in a tough moment.”
He emphasized the company’s unwavering commitment to safety and quality above all else, aiming to instill confidence in regulators, customers, employees, and the flying public.
Boeing has encountered obstacles in scaling up production, particularly of its popular 737 Max aircraft, and has instead reduced output.
Following an incident where a door plug blew out on an Alaska Airlines Max 9 on January 5, the Federal Aviation Administration (FAA) prohibited Boeing from increasing production.
The FAA also identified numerous instances of noncompliance within Boeing’s supply chain and, on February 28, gave Boeing 90 days to devise a plan for quality control enhancement.
Calhoun reiterated that Boeing’s production of the 737 Max has dropped below 38 jets per month, and this rate will be maintained at least through the first half of the year.
Deliveries have significantly slowed this quarter, with Boeing anticipating slower production increases and deliveries of its 787 Dreamliners due to parts shortages.
In the first quarter, Boeing’s commercial airplane unit revenue declined by 31% to $4.65 billion compared to the previous year, with negative margins widening to 24.6% from 9.2%.
Despite these challenges, Calhoun expressed optimism about the company’s efforts to stabilize the supply chain and enhance factory operations for long-term sustainability.
Adjusted for one-time items, including pension costs, the company reported a loss of $388 million, or $1.13 per share.
Boeing’s adjusted loss per share of $1.13 outperformed analysts’ expected loss of $1.76 per share, while revenue of $16.57 billion surpassed the estimated $16.23 billion.
Despite the challenges, Calhoun reaffirmed Boeing’s goal of achieving $10 billion in annual free cash flow by 2025-2026, though he acknowledged a potential delay of approximately six months in reaching that target.
Boeing has been actively addressing manufacturing issues to reduce what is known as “traveled work,” ensuring that manufacturing steps occur in the correct sequence. Calhoun stated that Boeing’s fuselage maker, Spirit AeroSystems, will only ship conforming fuselages.
Boeing has been engaged in discussions to repurchase Spirit, a company it spun off nearly 20 years ago. Progress in these discussions is contingent on addressing concerns related to non-Boeing customers, which are crucial for an acquisition agreement.
Calhoun expressed optimism about reaching a deal with Spirit during the second quarter, highlighting the importance of allowing Spirit to address its commitments to its other customers before finalizing the agreement.
