First delivery of 777X jetliner pushed back to 2025 while costs mount on big military programs
Aerospace companies continue to struggle with supply-chain issues, but Boeing has wrestled with a range of other challenges on many of its commercial and military aircraft, including the planes that will serve as the next Air Force One.
The relaxation of pandemic-related travel restrictions has helped air travel recover in recent months, boosting jet orders for Boeing and Airbus SE, which are both increasing jetliner production.
Boeing said it would pause production of the 777X, which can carry around 400 passengers, and start booking charges of $1.5 billion from the current quarter to reflect the move. The company had already taken a $6.5 billion charge two years ago on the 777X, which will be its largest jet when production of the 747 jumbo ends later this year.
The 787 Dreamliner, another Boeing wide-body jet, also continues to weigh on results, with production at low levels as the company addresses quality issues that have frozen almost all deliveries since October 2020.
Boeing booked $312 million in extra costs on the 787 in the quarter, part of an expected $2 billion bill for delayed production. The company said it has submitted a plan to resolve quality issues to the Federal Aviation Administration, which has the final say on allowing them to resume
The FAA said Wednesday that safety drives the pace of the agency’s reviews.
Boeing missed Wall Street forecasts for profit and sales in the first quarter to March 31, though it maintained its guidance for free cash flow–––needed to pay down the debt it amassed to weather the pandemic––to turn positive this year. It burned through $3.2 billion in cash in the latest quarter.
The adjusted per-share loss of $2.75 compared with the 25-cent loss consensus among analysts polled by FactSet.
Boeing shares fell more than 3% in premarket trading.
Chicago-based Boeing took a $660 million charge on the VC-25B presidential jet and $367 million on the new T-7A Air Force trainer, which it said reflected supply chain issues, schedule delays and inflation pressures. It also took a $212 million charge to reflect contract costs related to sanctions on Russia and the war in Ukraine.
Sales in the quarter fell 8% to $14 billion, with analysts expecting $16 billion. Boeing has been delivering 737 MAX jets at a slower pace than analysts expected, and said it would raise monthly production of the plane to 31 during this quarter.
China hasn’t recertified the MAX to resume flights, and Boeing has still to secure approval from the FAA for two versions of the aircraft.
Boeing hasn’t provided guidance on sales, earnings and jet deliveries since 2019, but analysts had expected Boeing to rebound to a $2.7 billion profit this year after losing $4.3 billion in 2021 and almost $12 billion in 2020.
Write to Doug Cameron at [email protected]
Credit: www.wsj.com /