Boeing’s first-quarter revenue fell for the first time in seven quarters, although the U.S. aircraft manufacturer exceeded toned-down Wall Street predictions after a mid-air cabin door blowout in January forced a production slowdown for its most popular jets. Boeing stated that its first-quarter cash burn, a metric closely watched by investors, was $3.93 billion, beating the consensus analyst estimate of a $4.49 billion cash burn. In March, Boeing estimated a cash burn of between $4 billion and $4.5 billion due to the crisis caused by the January 5 incident involving a nearly new 737 MAX 9 jet. The company’s shares, which have dropped 35% year-to-date, gained 3.6% in volatile premarket trading after its per-share loss was less than anticipated. ‘Well, it could have been worse. While the loss and cash outflow are not as bad as feared, the company still faces significant challenges in its Commercial Aircraft division that need to be addressed,’ Vertical Research Partners analyst Robert Stallard said in a note. The U.S. Federal Aviation Administration (FAA) has imposed a production limit on Boeing’s popular 737 MAX jets following the January 5th incident involving an Alaska Airlines-operated aircraft. The FAA has also requested Boeing to present a comprehensive plan addressing ‘systemic quality control issues.’ In a letter to employees before the report, CEO Dave Calhoun, who will step down around year-end, noted that Boeing was ‘in a tough moment,’ slowing production to prioritize quality and safety enhancements. ‘Lower deliveries can present difficulties for our customers and financials. However, safety and quality must and will always come first,’ he added. This month, Reuters reported a significant decrease in the production of Boeing’s cash cow, the 737 MAX, as U.S. regulators increased factory inspections. The slow delivery rate could delay Boeing’s financial and production objectives, analysts warned. Last month, Boeing’s CFO stated that the company would need additional time to achieve its 2022 goal of $10 billion in annual cash flow by 2025 or 2026. This target is considered a crucial milestone in Boeing’s recovery from a previous crisis stemming from two MAX jet crashes in 2018 and 2019. According to a memo released on Monday, the company also anticipates a slower ramp-up in production and deliveries of its 787 widebody jets due to supplier shortages ‘on a few key parts.’ Despite production constraints at Boeing and its competitor Airbus, demand remains strong, although the European planemaker has gained an advantage in the narrowbody market in the first quarter. Boeing will have ‘largely delivered’ its inventory of 737s and 787s by the end of the year, generating much-needed cash flow, according to Calhoun. He also mentioned that the defense sector, which has been struggling in recent quarters, ‘will be progressing toward historical performance levels.’ Boeing’s defense business saw a recovery in operating margins in the quarter, rising to 2.2% from a negative 3.2% a year ago, despite a $222 million loss on fixed-price development programs that have plagued the business in recent quarters. Boeing delivered 67 737s in the quarter ending in March, a 41% decrease from the previous year. Aircraft manufacturers receive the majority of their revenue upon aircraft delivery. Boeing’s commercial airplanes business experienced a decline in margins to negative 24.6% from negative 9.2%, partly due to compensation paid to airlines for the temporary grounding of MAX 9 aircraft. Overall, adjusted loss per share narrowed to $1.13, outperforming expectations of $1.76 per share loss, according to LSEG data. Quarterly revenue reached $16.57 billion, exceeding predictions of $16.23 billion.
Boeing Reports Quarterly Revenue Drop Amid Production Slowdown
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