New York (AFP) – Boeing reported a smaller loss in the second quarter Tuesday after the company delivered more planes, with its CEO pointing to signs of stabilization in operations. The aviation giant reported a loss of $697 million, compared with a loss of $1.4 billion in the year-ago period. Revenues rose 34.9 percent to $22.7 billion, topping analyst estimates.
Boeing delivered the most planes in a second quarter, or in the first half of a year, since 2018, reflecting efforts to improve its quality control operations following a number of safety problems. Boeing reaffirmed plans to seek a production increase this year for the 737 MAX from US regulators. That Federal Aviation Administration (FAA) approval stands as a key goalpost in Boeing’s turnaround following a January 2024 Alaska Airlines flight that saw a window panel blow out mid-flight.
Chief Executive Kelly Ortberg, who joined the company last August, said he was heartened by the progress but that more work is needed. “It’s turning a big ship around,” Ortberg said on a conference call with analysts. “I think we’re turning it. I don’t think it’s turned. We still have a lot of work to do.” Executives expressed confidence that Boeing would be cashflow positive by the fourth quarter. But Chief Financial Officer Brian West said Boeing’s third quarter cash position could be negatively impacted by a one-time $700 million payment connected to a Department of Justice agreement. The funds are associated with a settlement of a US criminal case related to two fatal 737 MAX crashes in 2018 and 2019. Boeing has previously said it expected to be cashflow positive in the second half of 2025. The aviation giant has registered annual losses the last six years, with the setbacks from the MAX crashes followed by the pandemic downturn. West told analysts a cash burn of $3 billion was a reasonable estimate for all of 2025.
– Certification challenge – Boeing increased production on the 737 MAX to 38 per month during the quarter. Ortberg declined to estimate when the FAA would approve a rate increase to 42 per month, but said the company would be working on the project in the third quarter. Production of the company’s other top-selling jet, the 787 Dreamliner, now stands at seven per month, up from five earlier in the year. Boeing has resumed deliveries to Chinese carriers after they were halted at the height of the trade conflict earlier this year between Washington and Beijing. The two countries have suspended their most onerous tariffs and are now working on a deal, with talks ongoing in Stockholm on Tuesday.
In a letter to employees, Ortberg said the certification of the 737-7 and 737-10 models is taking longer than previously expected due to challenges with anti-ice mechanisms on the plane. “Progress on this solution has taken longer than we expected and we now anticipate that certification for the airplanes will take place next year,” Ortberg said in the letter. On the conference call, Ortberg said the issue was in a “very delicate area” around the engines. Reworking the design has taken longer than expected, he said.
Ortberg sought to reassure analysts after workers with the International Association of Machinists and Aerospace Workers in St. Louis voted down a contract earlier this week, setting the stage for a potential strike early next month. Ortberg noted that the St. Louis operation, part of Boeing’s defense business, involves 3,200 employees, compared with roughly 30,000 machinists in the Seattle area who went on strike last fall. “I wouldn’t worry too much about the implications of the strike,” Ortberg said. “We’ll manage our way through that.” Shares of Boeing fell 3.7 percent in afternoon trading.
© 2024 AFP
