Boeing reports quarterly loss as high costs hamper recovery

BOEING reported a loss in the fourth quarter of 2022 as it grappled with high costs that slowed its recovery, even as a late flurry of jet deliveries drove a surge in cash.

The company’s adjusted earnings per share stood at minus US$1.75, it said on Wednesday (Jan 25). Revenue in the quarter was about US$20 billion, roughly in line with analysts’ estimates as compiled by Bloomberg.

The results underscored the work that Boeing had yet to do, to return its factories to high gear and fully capitalise on soaring demand for air travel. Before showing recent signs of recovery, the aviation titan endured a difficult few years, marked by the grounding of its cash cow model 737 Max and the Covid-19 pandemic.

Shares of Boeing fell 2.3 per cent as at 8.22 am New York time on Wednesday, before the start of regular trading there. From the start of the year to Tuesday’s close, its shares had risen 11 per cent.

Still, Boeing made good on a cash-flow recovery promised by executives, generating US$3.1 billion in the fourth quarter of last year. This was better than the US$2.9 billion that Wall Street had expected for the period. It also lifted the company to its first positive cash flow on an annual basis since 2018; it had burned through more than US$28 billion in the three-year stretch before 2022’s rebound.

Boeing chief executive Dave Calhoun said in a note to employees: “While we have made meaningful progress, challenges remain, and we have more work ahead to drive stability in our operations and within the supply chain.”

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“This will be another important year for us as we look to steadily increase our production rates, further improve performance, progress in our development programmes and deliver on our commitments,” he added.

Boeing is starting to step up jet deliveries and chip away at its stockpile of hundreds of already-built 737 Max, 787 Dreamliners and 777X jetliners. The company has been hobbled by shortages of critical components, such as engines, and too few trained workers on its production lines.

George Ferguson, a Bloomberg Intelligence analyst, said that while increasing deliveries can bolster cash, Boeing also faces the added expense of bringing aircraft out of storage and making repairs to meet the latest airworthiness standards. He estimated that the company had 229 undelivered 737 Max in its storage lots as at December 2022.

“When you start delivering airplanes that have already been built, obviously it turbocharges cash flow because you didn’t have to spend cash to build the airplane,” Ferguson said of Boeing’s cash surge in an interview before the earnings report. “But you have to spend some to get it out of inventory – before you can grab all that cash.”

Calhoun and Boeing chief financial officer Brian West are expected to provide an update on the status of the undelivered jets and efforts to stem defence programme losses during an earnings conference call later on Wednesday. They are also slated to discuss another potential earnings catalyst: China’s reopening travel market.

Airlines are snapping up new jets as they emerge from Covid. Boeing’s 737 Max has an opportunity to make headway against a rival Airbus SE model that is largely sold out until 2029. But the company has been slow to crank up work in its factories as it contends with shortages of engines, particularly for the 737 Max, and supplier hiccups for everything from computer chips to lavatories. BLOOMBERG