Boeing reports quarterly loss as high costs hamper recovery

Bloomberg

Boeing Co reported a surprise loss to end 2022 — its sixth straight money-losing quarter — as higher costs slowed the planemaker’s recovery even though a late flurry of jet deliveries drove a surge in cash.
Adjusted earnings were negative $1.75 a share in the last three months, the Arlington, Virginia-based company said in a statement. Revenue was about $20 billion, roughly in line with the average analyst estimate compiled by Bloomberg.
The results underscore the work Boeing still has to do to return its factories to high gear and fully capitalise on soaring demand for air travel. The US aviation titan has already endured a difficult few years marked by grounding of cash-cow 737 Max and pandemic,
before recent signs of recovery.
Still, Boeing made good on a cash-flow recovery promised by executives, generating $3.1 billion in the quarter. That was better than $2.89 billion Wall Street had expected for the period, and lifted company to its first positive cash flow on an annual basis since 2018. Boeing had burned through more than $28 billion over the three-year stretch
before the 2022 rebound.
The planemaker is starting to step up jet deliveries and chip away at its stockpile of hundreds of already-built Max, 787 Dreamliners and 777X jetliners. Boeing has been hobbled by shortages of critical components such as engines and new hires who are getting up to speed on its production lines, hampering its plans to speed up Max and Dreamliner output.
Increasing deliveries bolsters cash, although Boeing also faces the added expense of bringing the aircraft out of storage and making repairs so they meet the latest airworthiness standards, according to George Ferguson, an analyst with Bloomberg Intelligence. He estimated the company had 229 undelivered Max in its storage lots as of December 2022.
Airlines are snapping up new jets as they emerge from Covid, and Boeing’s 737 Max has an opportunity to make headway against a rival Airbus SE model that’s largely sold out until 2029. But the US planemaker has been slow to crank up work in its factories as it contends with shortages of engines, particularly for its 737 Max, and supplier
hiccups for everything from computer chips to lavatories.

Boeing’s commercial division posted a $626 million operating loss, despite its revenue almost doubling to $9.2 billion from a year earlier. With the big December delivery push, some analysts had expected the commercial business to show an operating gain.
Cash and marketable securities grew by nearly $3 billion to $17.2 billion during the final quarter, leaving Boeing with a cushion for the debt payments it faces this year.
The company said it plans to spend $3.2 billion on research and development this year, about $300 million more than in 2022. And it affirmed earlier guidance that it would generate between $3 billion and $5 billion in free cash.
The quarterly report was relatively clean, without any accounting charges or other major setbacks, said RBC analyst Ken Herbert. That’s a good sign for Boeing investors, he said, even if the results weren’t obviously strong.
The fact that there was “not a lot of news was good news,” Herbert said in an interview.