Boeing reported a $650 million operating loss for the fourth quarter, surprising Wall Street analysts who had expected the aircraft giant to turn a profit.
The company blamed the unexpected loss on “extraordinary production costs” as it tried to ship the remaining backlog of 737 Max planes and accelerate delivery of 787 Dreamliners. The company’s 787 production remains below normal.
“We continue to face too many stops in our chain … as we fall into supply chain shortages,” Chief Executive Dave Calhoun told investors on Wednesday. “So those stops, while they’re falling, aren’t where they need to be.”
Furthermore, Boeing had to issue an unspecified amount of compensation to 787 customers who were delayed by about a year.
The company also warned on Wednesday that it would take a loss in the current quarter, though it didn’t give a range. It was a disappointment, as analysts had expected Boeing to report low profits this quarter.
Shares of Boeing
(FATHER) fell more than 3% in late-morning trading following that guidance.
Boeing has reported only two profitable quarters in the nearly four years since the shutdown Max 737. Afterward two fatal accidents killing 346 people, the jet was grounded for 20 months, starting in March 2019. Then a year later, the pandemic brought demand for new planes and planes to a near standstill. — causing hundreds of jet orders to be canceled and losses piling up for Boeing Airplanes.
However, the industry has shown signs of recovery and analysts surveyed by Refinitiv have forecast that Boeing will earn 26 cents a share. Instead, it posted a loss of $1.75 a share. So while that’s an improvement from a loss of $7.69 a share in Q4 2021, it’s also another big disappointment.
Boeing’s problems in the fourth quarter are tied to the difficult few years since the 737 Max crisis.
First, the company had to shoulder hundreds of planes in excess inventory. Typically, Boeing does not keep inventory because the aircraft will be delivered to customers shortly after completion.
But even if the 737 Max jets couldn’t be delivered during the shutdown, Boeing continued to build them – in part to keep suppliers’ business afloat. It was then forced to find new buyers for some of those planes due to customers canceling orders during the pandemic.
In addition to the Max, the FAA flagged quality issues with the company’s 787 Dreamliners that prevented it from providing that model. Even though the Dreamliner isn’t as grounded as the Max, it’s still affecting the company: Much of Boeing’s unusual manufacturing costs for the quarter, CEO Dave Calhoun said in an interview on CNBC on Wednesday. The former was the result of having to rework both the Max jet and the Dreamliner.
Supply chain issues are improving, Calhoun adds, but they are not behind the company or the aerospace industry as a whole. He thinks there could be more quarters of losses despite the recovery in demand, and said he expects Boeing to be “abundant” in profits throughout the year as its Max and Dreamliner inventories are cleared. .
Boeing delivered 152 commercial planes in the quarter, up 54% from a year ago and better than its own target.
But digging deeper into the financial results will highlight a potential problem: It appears Boeing has received lower prices on some of its planes than analysts expected.
That’s because the company’s revenue fell short of forecasts, at just under $20 billion. While this is Boeing’s highest revenue figure since the start of the pandemic, it’s about $360 million below analysts’ consensus estimates. The combination of better-than-expected deliveries but worse-than-expected sales suggests that valuations are weaker.
Boeing has managed to do the best it can with its disappointing results.
The company points out that this is the first year of positive operating cash flow since the start of the 737 Max crisis. In the end, Boeing brought in $3.5 billion more in cash than it put in, and the company reaffirmed its guidance for 2023 for positive operating cash flow between 4.5 and 5. billion dollars to 6.5 billion dollars.
“Demand in our portfolio is strong and we remain focused on driving stability in our operations and in our supply chain to meet our commitments by 2023 and more,” Calhoun said in the company statement. “While challenges remain, we are well positioned and on track to restore our financial and operational strength.”