Boeing posted a $650 million operating loss in the fourth quarter, surprising Wall Street analysts.
The company blamed the unexpected loss on “unusual production costs” as it tried to deliver the remaining backlog of 737 Max jets. Increase deliveries of 787 Dreamliners. The company’s production of the 787 is below normal rates.
What’s more, Boeing had to pay unspecified compensation to 787 customers whose deliveries were delayed by about a year.
Boeing has reported only two profitable quarters in the nearly four years since the plane took off 737 max. After Two fatal accidents Killing 346 people, the jet was grounded for 20 months starting in March 2019. Then a year later, the pandemic nearly halted flying and demand for new planes — canceling hundreds of jet orders and triggering a pile of losses. Boeing.
Still, the industry has shown signs of growth, and analysts polled by Refinitiv predict Boeing will earn 26 cents a share. Instead it reported a loss of $1.75 per share. While that’s an improvement from the loss of $7.69 a share in the fourth quarter of 2021, it’s also a big disappointment.
Boeing’s troubles in the fourth quarter are tied to its tough few years since the 737 Max crisis.
For one, the company was saddled with an excess inventory of hundreds of jets. Boeing usually does not hold inventory because the planes are delivered to customers as soon as they are completed.
But despite not being able to deliver the 737 Max jets when they landed, Boeing kept building them — partly to keep its suppliers in business. Customers canceled orders during the pandemic and were forced to find new buyers for some of those planes.
Beyond the Max, the FAA flagged quality problems with the company’s 787 Dreamliners, and it stopped offering that model. While the Dreamliner didn’t take off like the Max, it still hurt the company: Boeing’s abnormal production costs last quarter were the result of having to rework both the Max and the Dreamliner jet, CEO Dave Calhoun told CNBC in an interview Wednesday.
Calhoun added that supply chain problems are improving, but they are not behind the company or the aerospace industry, and he suggested that money-losing quarters will be more likely even if demand picks up again. Margins throughout the year as its Max and Dreamliner inventories are cleared.
Boeing delivered 152 business jets in the quarter, up 54% from a year ago and better than its own target.
But digging deeper into the financial results highlights a potential problem: Boeing appears to have gotten lower prices on some of its planes than analysts expected.
That’s because the company’s revenue fell short of forecasts, coming in at less than $20 billion. While that was Boeing’s highest revenue since the pandemic began, it was about $360 million below analysts’ consensus estimate. A combination of better-than-expected deliveries but worse-than-forecast earnings suggests weak pricing.
Boeing tried to put a better spin on its disappointing results.
The company pointed out that this was the first full year of positive operating cash flow since the start of the 737 Max crisis. Boeing ultimately brought in $3.5 billion more cash than it spent, and the company reaffirmed its guidance for 2023 of positive operating cash flow of $4.5 billion to $6.5 billion.
“Demand remains strong across our portfolio, and we are focused on driving stability in our operations and supply chain to meet our commitments through 2023 and beyond,” Calhoun said in the company’s statement. “While challenges remain, we remain well positioned and on track to restore our operational and financial strength.”
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