Boeing posts $3.3 billion loss on defense program costs – ABC 6 News

Boeing reported a startling $3.3 billion third-quarter loss on Wednesday as revenue fell short of expectations and huge losses were needed for fixed-cost government programs, including new planes. presidential Air Force One.

The company blamed rising manufacturing and supply chain costs for driving the losses in government programs.

CEO David Calhoun said Boeing remained in a “challenging environment” and had “more work to do to ensure stability”.

Shares rose 1% in morning trading, which analysts suggested by Boeing’s ability to generate $2.9 billion in free cash flow – a metric that excludes some non-cash items such as charges. recorded by Boeing on government work.

Revenue from Boeing’s normally consistent defense and space business fell 20%, and it took $2.8 billion in fees for a military tanker, Air Force One, a NASA program to build a starship space that can carry astronauts to the International Space Station, and other programs.

“We are not bothered by those. They are what they are,” Calhoun said in a call with analysts.

Boeing officials said they were working more closely with suppliers to reduce disruption at Boeing factories.

Boeing has already incurred billions of dollars in losses on these government programs, including about $1 billion in charges related to the construction of two new presidential jets, a deal struck with then-President Donald Trump.

Boeing’s commercial aircraft business has recently shown improvement as air travel increases and airlines search for new planes. On Wednesday, Alaska Airlines announced it would exercise options to purchase another 52 737 Max jets.

The airline side of Boeing’s operations saw revenue jump 40% from a year earlier as it delivered more planes, but it still lost $643 million, slightly less than there was. one year old.

Boeing has been hampered by the inability to deliver any of its large 787s to airlines for most of a two-year period due to production defects, although it resumed deliveries in late August, supplying an important source of cash for the company.

Of Boeing’s three main divisions, based in Arlington, Va., only the services business turned a profit.

Third quarter results deteriorated from a loss of $132 million a year earlier. Adjusted to exclude certain items, the loss was $6.18 per share on revenue of $15.96 billion. Analysts had expected the company to earn 13 cents per share and post revenue of $17.91 billion.

Investors appeared to ignore the net income figures and focus on the surprisingly high cash flow figure. Cowen analyst Cai von Rumohr said that was due to increased aircraft deliveries from airlines, which indicates the company is cutting inventory.

Calhoun highlighted the cash flow number during the call with analysts and a letter to employees, both of which referenced Boeing’s ongoing turnaround effort.

“That said, we remain in a challenging environment and still have work to do to ensure that we consistently deliver on our commitments and restore our company’s strength,” Calhoun told employees. He said Boeing’s production facilities “are not pushing the system too fast. We slow down when necessary” to make sure the job gets done.

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