New York (AFP) – Boeing shares slumped around nine percent Tuesday as the company’s cautious production growth timeframe surprised Wall Street, deepening questions about how fast recent plane certification and defense procurement wins will translate to the bottom line. Near 1540 GMT, Boeing shares stood at $171.38, down nine percent, with stock reacting poorly to forecasts from Boeing leaders on a conference call.
Chief Executive Kelly Ortberg said the company does not expect 737 MAX output to reach 52 per month until the second half of 2027, as it must first “stabilize” output at 47 per month. Raising MAX output has been viewed by investors as central to revenue and profit growth. But Ortberg, who joined Boeing in the aftermath of safety disasters, defended the approach. “We’re making progress, but we still have more work to do, and I’m expecting it’ll take us into next year to get fully stable at this rate,” Ortberg said of the 47, citing the need for greater predictability in wings production and with the production of fuselages at its Kansas operation. “It’s more important that we do this ramp right than what particular month we achieve a rate break,” Ortberg said.
Ortberg also put a timeframe on when the company will achieve $10 billion in annual free cash flow, saying it will reach the key target of financial health in 2029. After Ortberg released this statement, shares fell further, suggesting analysts had expected a quicker timeframe. “Everybody wants us to go faster. I get that, but we’re going to stay disciplined as we ramp up here,” Ortberg said. Ortberg joined Boeing as CEO in August 2024 as the company struggled to move past a pair of deadly 737 MAX crashes and a near-catastrophic 737 MAX flight in January 2024 in which a window blew out mid-flight. The company at the time faced criticism that the problems stemmed from a culture that chased quick payoffs while short-changing safety.
Ortberg’s comments came as Boeing reported a third-quarter loss of $116 million, compared with a loss of $5.3 billion in the year-ago period, mostly from delays to certification of the 777X, the latest generation in Boeing’s long-range, wide-body commercial jet family. The results translated into a larger earnings per share loss than analysts expected, but the company pointed to recent commercial aircraft certifications and Pentagon awards as signs of progress in its turnaround. Shares did not move significantly after the earnings press release was published.
Ortberg cited the Federal Aviation Administration’s certification of the 737 MAX 7 and 737 MAX 10, as well as a “transformational” Pentagon award for the US Navy’s next-generation fighter jets as evidence of momentum. “Expectations are rising, and they should. We have a stronger foundation than a year ago, but we also have more work to do to deliver on our backlog, strengthen our culture, and improve how we work every day,” Ortberg said in a message to employees. Revenues rose four percent to $24.2 billion behind increased deliveries in defense, space, and security business, and higher sales in Boeing global services.
Boeing’s revenues for commercial aircraft dipped from the year-ago period, with it delivering 161 aircraft in the quarter, just one more than in the 2025 period. Of the still-outstanding 777X, Boeing said the program “continued to progress on 777-9 certification flight testing and remains on track for first delivery in 2027.” The 777-9 is a variant of the new aircraft. “We’re providing this with confidence that the team’s ready to go execute,” Ortberg said of the latest targets. “As I mentioned, over the last two years, we’ve made exceptional progress restoring trust, retiring risk, and transforming our culture and rebuilding the foundation of safety and quality that will help ensure durable success,” Ortberg said.
“We have also been deliberate about not getting ahead of ourselves, given the range of outcomes tied to the production ramp, certification timing, and other critical program execution. But we appreciate that it’s been difficult for share owners to assess how our progress will translate into financial performance. We’re now at a point where the range of outcomes is narrowing.”
© 2024 AFP
