US Markets
Wednesday, October 25th, 2023 2:19 pm EDT
Key Points
- Boeing will deliver fewer 737 Max aircraft this year due to production flaws, with an estimated range of 375 to 400 aircraft compared to the previous projection of 400 to 450. This development poses challenges for both Boeing and airlines eagerly awaiting more fuel-efficient jetliners.
- Despite the production problems, Boeing is maintaining its expectations for 2023 free cash flow in the range of $3 billion to $5 billion. Boeing’s shares dipped more than 1% in response to the news.
- The production issues relate to misdrilled holes in the fuselages, a problem linked to Spirit AeroSystems, the producer of these components. Boeing plans to increase its aircraft output to meet growing demand after the COVID-19 pandemic, with a focus on resolving these production challenges “once and for all.” Additionally, Boeing’s defense unit reported losses related to the Air Force One program and a satellite contract, while the commercial aircraft unit saw increased sales, primarily driven by deliveries of wide-body 787 Dreamliner planes. The company remains focused on its production ramp-up and plans to deliver 70 to 80 Dreamliners this year.
Boeing has announced that it will deliver fewer 737 Max aircraft than originally projected for the year due to production issues. The company now expects to hand over between 375 and 400 of the 737 Max planes in 2023, down from the previous estimate of 400 to 450. These issues stem from misdrilled holes in the fuselages, which are produced by Spirit AeroSystems. Boeing has maintained its free cash flow expectations for 2023, despite the production problems.
CEO Dave Calhoun emphasized the company’s commitment to addressing the issues transparently and expressed confidence in resolving them. Boeing is working on increasing its aircraft output to meet the rising demand for air travel post-pandemic.
Sales in Boeing’s commercial aircraft unit increased by 25% compared to the third quarter of 2022. However, production delays and unusual costs resulted in a negative operating margin for the 737 model. Boeing plans to increase production of the 737 to 38 planes per month by the end of the year and continues to work on its Dreamliner production.
Boeing’s defense unit also reported losses, partly due to issues related to the Air Force One program and a satellite contract. Despite these challenges, Boeing reported a narrowed net loss for the third quarter and revenue that exceeded analysts’ estimates. The company will hold a call with analysts to address production pace, demand, and strategies for improving margins in its defense unit.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/25/boeing-ba-earnings-q3-2023.html
