Boeing on Wednesday reported a third-quarter loss of $5.4 billion as massive added costs from the delayed certification of its 777X aircraft weighed down its results.
The aviation giant scored a 30-percent jump in revenues to $23.3 billion following much higher commercial plane deliveries compared with the year-ago level.
But the performance was marred by a one-time charge of $4.9 billion on the repeatedly delayed 777X program, which has faced a prolonged certification process with US authorities.
Boeing had hoped to begin the next phase of certification flights this year. But the company has pushed those back until 2027 to complete needed preparatory analysis, company officials said.
Chief Executive Kelly Ortberg pointed to the October approval by the Federal Aviation Administration of an increased monthly production rate on the 737 MAX as a sign of the company’s progress.
He also noted that Boeing generated positive free cash flow during the quarter, a benchmark closely watched by Wall Street.
But Ortberg said more work was still needed to turn Boeing around after a series of safety problems, including two fatal 737 MAX crashes in 2018 and 2019 that have led to more intense FAA scrutiny over new plane certifications.
“While we are disappointed in the 777X schedule delay, the airplane continues to perform well in flight testing, and we remain focused on the work ahead to complete our development programs and stabilize our operations in order to fully recover our company’s performance and restore trust with all of our stakeholders,” Ortberg said.
Boeing has repeatedly pushed back the timeframe on the 777X. Under the latest shift, commercial deliveries will commence in 2027, delayed from the prior 2026 timeframe.
After beginning deliveries, company officials expect the program to operate as a drain on cash in the first couple of years as production ramps up, but to turn cash flow positive in 2029, Chief Financial Officer Jay Malave said on a conference call.
In 2020, Boeing booked a $6.5-billion charge on the 777X, citing the lengthy FAA certification process and the pushing back of demand from airlines for the jet due to Covid-19.
Ortberg, in a conference call with financial analysts, described the shifting backward of the 777X tests as the result of new requirements that the FAA and Boeing are both working through.
“I think the flight testing should go reasonably quickly,” said Ortberg, adding “it’s the analysis, the paperwork submittal and the approval process” that has required more work than expected.
– Labor strike –
Ortberg told CNBC that there may be a “minor” impact on the certification process from the ongoing US government shutdown, “but clearly the government shutdown did not drive this charge.”
In a message to employees, Ortberg said the company’s defense operation in St. Louis is “effectively executing our strike contingency plans” following the vote Sunday by more than 3,000 workers to reject the company’s latest contract offer.
Ortberg said on the conference call that production in the striking operation is operating at “about the same” rate as prior to the stoppage.
Local Boeing officials in St. Louis have said the company is accelerating recruitment of replacement workers and welcoming back employees who cross the picket line.
Union leaders have described Boeing as refusing to negotiate in good faith, while criticizing the hiring of replacement workers as risky.
“These are complex, precision-built products — and they cannot replace the skilled, experienced IAM members who have dedicated their careers to this work,” said a Tuesday statement from the International Association of Machinists and Aerospace Workers District 837.
Shares of Boeing fell 3.3 percent in afternoon trading.
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