Boeing on Wednesday reported a narrower-than-expected loss and lower cash burn than anticipated, and said it is stabilizing its supply chain as it grapples with the latest 737 Max safety crisis.
Boeing burned $3.9 billion in the first quarter, beating a previous company forecast and Wall Street analysts’ expectations for cash burn of as much as $4.5 billion for the three-month period.
“Near term, yes, we are in a tough moment,” CEO Dave Calhoun, who announced in March that he would step down by year-end, said in a note to employees on Wednesday. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else. We are absolutely committed to doing everything we can to make certain our regulators, customers, employees, and the flying public are 100 percent confident in Boeing.”
Boeing has been hamstrung in ramping up production, especially of its best-selling 737 Max planes, and instead has lowered output. After the door plug blew out on the Alaska Airlines Max 9 on Jan. 5, the Federal Aviation Administration has barred Boeing from increasing output. The FAA also said it found numerous issues of noncompliance along Boeing’s supply chain.
Calhoun said the company has lowered production to below 38 Max jets per month. Deliveries have slowed sharply this quarter.
Boeing’s all-important commercial airplane unit revenue dropped 31% to $4.65 billion in the quarter compared with last year, with negative margins widening to 24.6% from 9.2%.
“We are using this period, as difficult as it is, to deliberately slow the system, stabilize the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term,” Calhoun said. “As these efforts begin to take hold, we’re seeing early signs of more predictable, stable and efficient cycle times in our 737 factory, and expect this will continue to slowly improve.”
Boeing lost $355 million in the first quarter, or 56 cents a share, down from a $425 million, or 69 cent per-share, loss a year earlier. Excluding one-time items, including pension costs, Boeing lost $388 million, or $1.13 a share.
Revenue fell 8% to $16.57 million, slightly ahead of analysts’ estimates.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG were expecting:
- Loss per share: $1.13 adjusted, vs. estimated adjusted loss $1.76
- Revenue: $16.57 billion, vs. estimated $16.23 billion
Boeing executives will hold a call with analysts at 10:30 a.m. ET, and questions abound for Boeing’s lame duck CEO Calhoun and other Boeing leaders.
Among those questions: When will Boeing stabilize its production line and increase production of the 737 Max and other planes? When will Boeing appoint a new CEO? How much will the current crisis cost Boeing? When might Boeing finalize a deal to buy back fuselage maker Spirit AeroSystems.
