boeing It cut its losses late last year, but its CEO said now is “not the time” for financial targets as the manufacturer deals with the fallout from a fuselage panel that exploded mid-flight on one of its new 737 Max 9s. early this month. .
Boeing CEO Dave Calhoun, who took the helm of the airline giant four years ago after two deadly Max crashes, is again under pressure to clean up the company's reputation with airline customers, regulators and the public after of the accident on January 5. accident in which a panel exploded Alaska Airlines Flight 1282 when the plane took off from Portland, Oregon, leaving a gaping hole in the side of the plane.
Calhoun praised Alaska for grounding the Max 9 planes after the crash. The Federal Aviation Administration subsequently grounded the fleet.
“Alaska airlines did exactly what companies like Boeing would expect them to do at a time like that and that's why the airline industry is so safe,” Calhoun said on an earnings conference call Wednesday. “We caused the problem. And we understand it.”
Federal investigators are examining whether the door plug was installed incorrectly before the Max 9 plane was delivered to Alaska late last year. The National Transportation Safety Board is expected to release a preliminary report on the crash in the coming days.
The Alaska 1282 crash was the most serious in a series of apparent production failures, which have slowed deliveries of new planes and angered some of the company's largest airlines in the process, while its main rival, Airbus, continues to surpass Boeing in delivering new aircraft. .
“While we often use this time of year to share or update our financial and operational goals, now is not the time for that,” Calhoun said in a message to employees Wednesday. “We will simply focus on each next aircraft while doing everything we can to support our customers, follow the lead of our regulator and ensure the highest level of safety and quality in everything we do. Ultimately, that is what will drive our performance.”
Boeing reaffirmed its 2025 and 2026 financial goals it set at Investor Day 2022: to reach around $10 billion in free cash flow and $100 billion in revenue as early as next year.
“We're still confident in the targets we set for 25 and 26, although it may take longer in that window than originally anticipated and we won't rush the system,” Chief Financial Officer Brian West said on an earnings conference call Wednesday.
Boeing delivered 528 planes to customers last year, up from 480 in 2022. That includes the Max, 787 Dreamliners and others. Boeing in 2022 said it was targeting annual deliveries of about 800 planes next year or in 2026.
Last week, the FAA cleared the Max 9 to fly again but said it would halt Boeing's planned production ramp-up, which the manufacturer aimed to reach about 50 Max planes per month in 2025 or 2026. Boeing confirmed Wednesday that is building 38 Maxes a month.
The Boeing 737 Max is the company's best-selling aircraft. A delay in production increases could hamper Boeing's financial goals and affect suppliers who have been preparing for increased production, as well as customers who have new planes to meet post-Covid travel demand.
Calhoun has visited the production lines of companies and suppliers, as well as lawmakers on Capitol Hill in the weeks since the incident, promising transparency and fixing any deficiencies in their manufacturing. The company had the first of several production shutdowns last week to discuss manufacturing issues and other possible improvements to Boeing processes with workers.
“Our people in the factory know better than anyone what we need to do to improve. We must all seek their feedback, understand how to help and always encourage any team member who raises issues that need to be addressed,” Calhoun said in his note. to employees on Wednesday. “We'll go slow, we won't rush the system and we'll take our time to get it right.”
Boeing executives also face questions about how the crash and additional FAA scrutiny could affect the certification schedule for the Max 7 and Max 10, the smallest and largest models of the company's best-selling planes.
On Monday, after pressure from lawmakers, Boeing said it will not seek a safety exemption for the Max 7 related to a de-icing system but will instead work on an engineering solution.
Here's how Boeing performed in the final three months of 2023 compared to what analysts surveyed by LSEG, formerly known as Refinitiv, expected:
- Adjusted loss per share: 47 cents vs. 78 cents expected
- Revenue: $22.02 billion vs. $21.1 billion expected
Boeing posted a net loss of $30 million, or 4 cents per share, in the fourth quarter, narrowing from a loss of $663 million, or $1.06 per share, a year earlier. Adjusting for extraordinary items, Boeing reported a net loss of 47 cents per share.
Its free cash flow of $2.95 billion in the quarter beat analysts' expectations. Revenue grew 10% year over year to $22.02 billion.
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