Boeing losses, problems continue to mount

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CNN
—

Boeing reported a slightly smaller loss in the first quarter than in the same period last year, and warned investors and employees that it would have to cut production further to deal with quality and safety issues on its production line.

Boeing reported an underlying operating loss of $388 million, or $1.13 per share, from the $440 million it lost on that basis the year before. That was well below analysts' expectations of $1.63 per share for the quarter. But the improvement came from outside its main commercial aircraft unit, where losses from operations doubled to $1.1 billion.

Revenue fell $1.4 billion, or 8%, to $16.6 billion, as problems at the planemaker led to a sharp decline in aircraft deliveries to its airline customers. The company makes most of its money from commercial aircraft sales only when they are delivered to customers.

Those deliveries are likely to decline in the future, as Boeing said it will produce fewer 737 MAX planes than it originally planned for the rest of this year as it tries to fix problems on its assembly lines. It added that production of its larger 787 Dreamliner aircraft would also be limited due to supplier issues.

“We will take the time necessary to strengthen our quality and safety management systems, and this work will position us for a stronger, more stable future,” said CEO Dave Calhoun, who announced his plans this quarter. He left his post By the end of the year.

The company said that the results were affected by the compensation provided to airline customers for the three-week grounding of the 737 MAX 9 aircraft, following an accident that occurred on January 5. The door plug on an Alaska Airlines plane exploded A large hole was left in the side of the plane shortly after take-off.

Boeing did not disclose the amount of compensation to airlines in its initial earnings report. Alaska Air and United Airlines, the two companies with the largest number of 737 MAX 9 aircraft in their fleets, have already announced that they have reached compensation agreements with Boeing.

Alaska said it received an initial cash compensation of $162 million. United did not mention the amount it agreed to, but said it was his suspension It cost him about $200 millionIts compensation will be in the form of credits on future purchases from Boeing.

The incident sparked a series of investigations into Boeing by the FBI National Transportation Safety Boardthe Federal Aviation Administration And the Department of Justicethe latter of which could expose the company to Criminal liability. It has also focused attention on the safety and quality of its aircraft, and its treatment of employees who raise concerns about those issues, including… Congressional hearings.

Boeing said it has made a new commitment to improving its quality and safety issues, and it wants employees who have concerns to come forward.

Boeing shares (Bachelor'swhich had lost 35% so far this year through Tuesday's close, rose more than 3% in premarket trading on a smaller-than-expected loss.

Boeing has been exposed to a series of losses and problems related to the quality of its aircraft dating back at least five years. Two fatal accidents Of the 737 MAX aircraft in late 2018 and early 2019 that killed 346 people, they were linked to an accident. Design flaw In the plane and led to Grounding for 20 months Boeing's best-selling model. It later faced aircraft quality problems once the 737 MAX returned to service.

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All told, the company reported core operating losses of $31.9 billion since the shutdown began in 2019.

But it benefited a Monthly record of orders in December, capping one of its best years ever in terms of commercial aircraft sales. Deliveries also reached a five-year high, and it even reported a rare $90 million core operating profit for the fourth quarter of 2023. It also announced plans to ramp up 737 MAX production throughout 2024 in order to return to sustainable profitability.

But by the time it announced those better 2023 results, the accident on an Alaska Airlines flight had already occurred, dashing hopes that it was about to put its financial woes behind it.

While the NTSB has not specifically determined who was responsible for the accident, a preliminary investigation found that the plane left the Boeing factory without the four screws needed to hold the door plug in place.

This is a developing story. It will be updated.