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New York
CNN
—
Boeing reported an operating loss of $650 million in the fourth quarter, surprising Wall Street analysts who had expected the aircraft giant to turn a profit.
The company blamed “abnormal production costs” for the unexpected losses as it attempted to deliver the remaining backlog of 737 Max jets and ramp up deliveries of the 787 Dreamliner. The company’s 787 production remains below normal rates.
In addition, Boeing had to pay an unspecified amount of compensation to 787 customers whose deliveries were delayed by about a year.
Boeing has only reported two quarters of profit in nearly four years since the 737 Max grounded. The jet has been grounded for 20 months since March 2019 after his two fatal crashes that killed 346 people. A year after that, Boeing’s losses piled up as hundreds of jet orders were canceled as the pandemic nearly halted demand for planes and new aircraft.
Still, the industry is showing signs of recovery, with analysts surveyed by Refinitiv predicting Boeing would earn 26 cents a share. Instead, he reported a loss of $1.75 per share. That’s an improvement from his loss of $7.69 per share in Q4 2021, but it’s also a huge disappointment.
Boeing’s problems in the fourth quarter relate to the difficult years since the 737 Max crisis.
For one thing, the company had an excess inventory of hundreds of jets. Boeing typically doesn’t keep an inventory of planes because they are delivered to customers as soon as they are completed.
However, the 737 Max jets could not be delivered during the grounding, but Boeing continued to manufacture them. It was then forced to find new buyers for some of these planes as customers canceled orders during the pandemic.
Beyond Max, the FAA has flagged quality issues with the company’s 787 Dreamliner and has stopped offering that model. The Dreamliner didn’t hit the ground like the Max, but it still hit the company.Many of Boeing’s unusual production costs last quarter meant that both the Max and Dreamliner jets had to be rebuilt. This is the result.
Supply chain issues are improving, Calhoun added, but they’re not lagging behind the company or the aerospace industry as a whole, with more loss-making quarters expected despite a recovery in demand. Suggesting it could continue, he said he expects Boeing to have “bumping”. Margins will increase throughout the year as Max and Dreamliner inventories are wiped out.
Boeing delivered 152 commercial jets in the quarter. This is a 54% increase over the previous year and exceeds the company’s target.
But a deeper dive into the financial results highlights potential problems. Boeing appears to have received some of the aircraft at lower prices than analysts had expected.
That’s because the company’s revenue fell short of expectations, just under $20 billion. It was Boeing’s highest revenue since the pandemic began, but it was about $360 million less than analysts’ consensus estimates. The combination of better-than-expected deliveries and worse-than-expected returns suggests weak pricing.
Boeing tried to put as much spin as possible on that disappointing result.
The company noted it was the first full-year operating cash flow positive since the 737 Max crisis began. Boeing ultimately brought in $3.5 billion more cash than it spent, and the company reaffirmed his 2023 guidance of positive operating cash flow from $4.5 billion to $6.5 billion.
“Demand across our portfolio is strong and we remain focused on increasing stability within our operations and supply chain to meet our commitments beyond 2023.” We are well positioned and are on the right track to restore operational and financial strength.”
Boeing (BA) shares fell 2.5% in morning trading.
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