Boeing (BA) Q3 2021 Losses As Dreamliner Weaknesses Drive Costs

Boeing said Wednesday that the shortcomings of its 787 Dreamliner will result in overhead costs of $ 1 billion and that it has cut production to about two planes a month as it struggles to address quality issues. These problems led to the suspension of supplies for much of the past year.

The manufacturer wrote off $ 183 million from this amount in the third quarter.

However, sales improved thanks to increased sales and shipments of aircraft. Boeing said its third-quarter revenue rose to $ 15.28 billion, up 8% from $ 14.14 billion a year earlier. This was below analysts’ forecast of $ 16.3 billion. The company reported a net loss of $ 132 million for the quarter, although it was less than the $ 466 million it lost a year earlier. On an adjusted basis, Boeing lost 60 cents a share, more than analysts had expected by 20 cents.

An employee works on the tail section of a Boeing Co. A Dreamliner 787 on a production line at the company’s final assembly plant in North Charleston, South Carolina.

Travis Dove | Bloomberg | Getty Images

“Our commercial market is showing improved signs of recovery with the proliferation of vaccines and the opening of border protocols,” CEO Dave Calhoun said in a note to employees following the publication of the results. “As demand resumes, supply chain capacity and global trade will be key drivers of our industry and global economic recovery.”

Boeing said that having workers in the supply chain “will be a critical element of surveillance.”

Boeing’s operating cash flow improved to a negative $ 262 million from $ 4.8 billion a year earlier.

Here are the company’s results compared to Refinitiv analysts’ estimates:

  • Adjusted results: Loss of 60 cents per share versus an expected loss of 20 cents per share.
  • Income: $ 15.28 billion versus the expected $ 16.3 billion.

Boeing first reported fuselage joint quality issues on some of its 787s last year. The troubles led to inspections that prompted Boeing to suspend aircraft deliveries to airline customers, depriving the company of cash.

Deliveries resumed briefly this year, but were stopped again in May for additional checks. According to analysts, Boeing has about 100 aircraft in stock. The company has repeatedly reduced the rate of production of liners. Boeing said in the summer that it produces fewer than five 787 aircraft a month.

“The company expects to maintain this pace until the resumption of supplies, and then over time will return to five a month,” – said in the message.

In an interview with CNBC’s “Squawk on the Street,” Calhoun declined to give an estimate of when 787 deliveries to customers, including American Airlines and United Airlines, would resume, saying it partly depended on the FAA.

“The FAA continues to work with Boeing as the company is working to demonstrate the reliability of its proposed method of inspecting some 787 undelivered aircraft,” the company said in a statement. “The FAA will not sign inspections until our safety experts are satisfied.”

The wide-body 787s are used primarily for long international travel. Demand for these flights has eased due to the Covid pandemic, but United, American and other carriers have reported a surge in bookings for transatlantic flights as governments ease travel restrictions in the wake of the pandemic.

When asked if the airlines have enough planes to resume sales, Calhoun told CNBC, “Well, today we have them.

“I think by the time we get to the second half of next year, I think everyone will be hard at work on these plans for the fleet,” he said.

Boeing has been mired in several crises since the first of two fatal crashes on its 737 Max three years ago. While he was struggling with 20-month plane landings, the coronavirus pandemic has eroded demand for travel and aircraft.

The company delivered 62,737s in the quarter, Calhoun said, up from the first quarter of 2019. It produces 19 Max aircraft a month, up from 16 in July. He stuck to a forecast of an increase in production to 31 per month in early 2022. Further increases in production will depend on the state of the supply chain, he said during a quarterly call.

Chinese regulators have yet to sign a contract with Boeing Max, the biggest obstacle to fully returning the aircraft to service. But Boeing said it expects Chinese regulatory approvals by the end of the year, with deliveries to that country’s airlines resume in the first quarter of 2022. Test flights for the aircraft’s recertification in China began in August.

The company has about 370 Max aircraft in stock and said that the “vast majority” have owners and that if its forecasts for deliveries to China fall short, it will deliver most of them by the end of 2023.

Boeing shares fell 1.5% to $ 206.61 on Wednesday. They are down 3.5% this year, compared with a 21% rise in the S&P 500.

Correction: Boeing said its third-quarter revenue rose to $ 15.28 billion, up 8% from $ 14.14 billion a year earlier. An earlier version skewed the figure a year earlier.

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