Boeing (BA) shares fell 2.8% on Wednesday after the company reported narrower-than-feared losses but still negative free cash flow of nearly $4 billion as a result of the 737 Max crisis reported that has shaken the aerospace giant.
Boeing reported first-quarter adjusted core loss per share of $1.13, less than the $1.72 estimate, on revenue of $16.57 billion, above forecasts of $16.25 billion US dollars, but represented an 8% decline from the previous year.
The aircraft maker also reported negative operating cash flow of $3.36 billion, compared to a loss of $318 million last year, and negative free cash flow of $3.92 billion, compared to a loss of $3.92 billion $787 million last year. Boeing said the results reflected lower commercial delivery volumes and did not provide updated production plans.
“Our first quarter results reflect the immediate actions we took to reduce 737 production and improve quality,” Boeing President and CEO Dave Calhoun said in a statement. “We will take the time necessary to strengthen our quality and safety management systems, and this work will position us for a stronger and more resilient future.”
Following the release, Boeing shares initially rose in early trading but fell midday after Moody’s downgraded Boeing’s unsecured debt rating to Baa3 from Baa2, citing “inadequate performance of Boeing’s commercial aircraft segment.” available. Boeing shares have lost more than 36% so far this year.
Boeing’s problems began in early 2024, when an Alaska Airlines 737-9 MAX jet suffered a high-profile door plug failure. This led to a grounding of the 737-9 MAX fleet, increased scrutiny of the plane maker’s 737 production and safety processes, and a decline in overall aircraft production.
This also led to a new whistleblower documenting production problems with the 787 Dreamliner and ultimately CEO Dave Calhoun’s departure. Boeing stock was the second-worst performer in the S&P 500 (^GSPC) during the quarter.
Boeing declined to provide guidance for 2024 in its report.
In terms of first-quarter deliveries, Boeing reported earlier this month that it delivered a total of 83 aircraft, including 67,737 jets, three 767s and 13,787 Dreamliner widebody jets. The total of 83 planes represented a 47% decline from last year, when Boeing delivered 130 planes, with 113,737 and 11,787 Dreamliners being the two largest components.
Boeing’s deliveries have been slowed by tightening scrutiny of aircraft assembly processes at its plants in Washington and South Carolina, leading to higher costs. Impacts on Boeing deliveries and aircraft production could also have a massive impact on Boeing’s cash flow and reserves.
Last week, Boeing was the focus of two separate Senate hearings. One examined Boeing’s safety practices and featured allegations about the 787 Dreamliner by a Boeing engineer and whistleblower named Sam Salehpour. Separately, another Senate panel held a hearing calling for a deeper investigation by the Justice Department to determine whether Boeing violated the terms of a deferred prosecution agreement.
In addition, airline partners such as United (UAL) and Delta (DAL) have sought new planes from other aircraft manufacturers such as Airbus (AIR.PA), which has benefited from Boeing’s recent troubles.
However, Boeing still managed to record 131 gross orders in the first quarter, with its commercial aircraft backlog still standing at a whopping 5,591 aircraft, worth about $448 billion. Despite all the difficulties, Boeing and Airbus are still the only providers of wide-body commercial aircraft.
Likewise, Boeing’s defense business is critical to many governments, especially the United States. In addition to fighter jets, military helicopters and tankers, Boeing produces a range of drones for air and sea use.
Pras Subramanian is a reporter for Yahoo Finance. You can keep following him Twitter and further Instagram.
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