BOEING on Wednesday (Apr 24) reported an 8 per cent decline in quarterly revenue to US$16.57 billion, the first drop in seven quarters, as the US planemaker slows production of its strongest-selling jets following a January mid-air blowout.
The US planemaker said its first-quarter cash burn, a metric closely watched by investors, was US$3.9 billion, compared with negative US$786 million a year ago.
But the planemaker in March had anticipated free cash flow usage would be between US$4 billion and US$4.5 billion, higher than they planned in January as Boeing wrestles with a full-blown crisis that has led to a management shakeup.
Shares were flat in premarket trading after rising 3.6 per cent earlier.
Since the Jan five accident on an Alaska Airlines-operated jet, the Federal Aviation Administration has imposed a cap on production of the company’s strong-selling 737 MAX jets. The FAA also has told Boeing to develop a comprehensive plan to address “systemic quality-control issues.”
CEO Dave Calhoun, who will step down around the end of the year, said in a letter to employees earlier on Wednesday that Boeing was “in a tough moment” in the near term. He reiterated however that the company was deliberately slowing the system to improve quality and safety.
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“Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else,” he added.
Reuters reported earlier this month that output of its cash-cow 737 MAX had fallen sharply amid a step up in factory checks by US regulators.
Analysts have warned the slow pace of deliveries risks delaying Boeing’s financial and production goals. Boeing’s CFO said last month that the company will need more time to hit a goal outlined in 2022 for an annual cash flow of about US$10 billion by 2025 or 2026.
The goal is seen as a key milestone as Boeing works to accelerate its recovery from an earlier crisis after two MAX jets crashed in 2018 and 2019.
The company also expects a slower increase in the production rate and deliveries of its 787 widebody jets as the US planemaker wrestles with supplier shortages “on a few key parts,” a memo showed on Monday.
However, demand for new planes remains strong amid constrained production at Boeing and its rival Airbus, though the European planemaker has increased its lead in the narrowbody market in the first quarter.
Calhoun said Boeing would have “largely delivered” 737 and 787 in inventory by the end of the year, bringing in much-needed cash. He added that its defence business, which has been losing money in recent quarters, “will be progressing towards more historical levels of performance.”
Boeing delivered 67 737s in the quarter through March, down 41 per cent from last year. Planemakers receive the bulk of the cash upon delivery of the aircraft.
Adjusted loss per share narrowed to US$1.13 from a loss of US$1.27. REUTERS
