Boeing Adjusts 737 Max Forecast Amid Production Issues but Upholds Cash Flow Projections

Boeing, the aerospace titan, recently announced its third-quarter results, revealing some unexpected turns. While the company missed its targets on both revenue and earnings per share, it maintained its cash flow guidance, providing some relief to shareholders.

Key Takeaways:

  • Boeing reported a Q3 revenue of $18.10 billion, falling short of the expected $18.16 billion.
  • The company posted an adjusted loss per share of $3.26, a steeper loss than the anticipated $2.95.
  • Despite these setbacks, Boeing’s Q2 revenue was 13% higher than the previous year.
  • The company attributed the results to “unfavorable defense performance and lower 737 deliveries.”
  • Boeing CEO, Dave Calhoun, expressed confidence in the company’s recovery and its ability to meet set financial goals.
  • The company adjusted its delivery forecast for the 737 Max jets to 375-400 for the year, down from the initial 400-450 estimate.
  • A supplier issue affecting the 737 Max production was identified, though it doesn’t pose an immediate safety concern.
  • Boeing’s 2023 cash flow forecast remains unchanged at $3 billion-$5 billion, with an operating cash flow of $4.5 billion-$6.5 billion.
  • The production rate for the 787 Dreamliner is set to increase, with plans to produce 70-80 jets this year.
  • Boeing’s order book saw a growth of 321 in the quarter, with significant orders from Ryanair, United Airlines, and Saudia Airlines.
  • The company’s total backlog is valued at $469 billion, representing over 5,100 commercial jets.

Detailed Insights:

Production Challenges Impact 737 Deliveries Boeing’s recent announcement of its Q3 results showcased the challenges the company faces. The aerospace giant reported a miss on both its top and bottom lines, primarily due to ongoing production issues with its 737 Max narrowbody jet. However, the company did reaffirm its cash flow guidance, which provided a silver lining for shareholders.

Financial Highlights For the third quarter, Boeing reported a top-line revenue of $18.10 billion, which missed the Street’s estimate of $18.16 billion. Furthermore, the company reported an adjusted loss per share of $3.26, which was wider than the expected loss of $2.95. On a brighter note, Boeing’s Q2 revenue figure marked a 13% increase compared to the same period a year ago.

CEO’s Statement “We continue to make progress in our recovery. Despite facing challenges in the short term, we are on track to achieve the financial goals we’ve set for this year and the foreseeable future,” stated Boeing CEO Dave Calhoun in the earnings release. He emphasized the company’s commitment to stabilizing its supply chain and enhancing operational performance.

Revised Delivery Forecast Boeing has adjusted its delivery forecast for the 737 Max jets. The company now expects to deliver between 375-400 jets this year, a reduction from the previously projected 400-450 deliveries. This revision is attributed to a supplier issue that impacted the production of the 737 Max. However, the company clarified that this is not an immediate safety concern.

Cash Flow Projections Remain Steady Despite the challenges, Boeing maintained its cash flow forecast for 2023. The company expects a free cash flow of between $3 billion and $5 billion and an operating cash flow ranging from $4.5 billion to $6.5 billion.

Dreamliner Production Boost Boeing also shared updates regarding its 787 Dreamliner. The company plans to increase its production rate, transitioning from four to five per month. The long-term goal is to produce 10 Dreamliners per month by 2025-2026. Boeing reaffirmed its commitment to producing 70-80 787 jets this year.

Order Book Growth In terms of gross orders, Boeing’s order book witnessed significant growth in the quarter. The company added 150 737 Max jets from Ryanair, potentially part of a larger 300 plane order worth up to $40 billion. Additionally, United Airlines placed a robust order for 50 planes for the 787 Dreamliner. Saudia Airlines also added 39 Dreamliner orders, contributing to the Kingdom of Saudi Arabia’s massive 78 Dreamliner order.

A Strong Backlog Boeing’s total backlog now stands impressively at $469 billion. This represents a whopping 5,100 commercial jets, showcasing the company’s strong position in the aerospace industry.

In conclusion, while Boeing faces challenges, its resilience and commitment to growth are evident in its strategies and projections. The aerospace giant continues to navigate the complexities of the industry, striving to meet its goals and deliver value to its stakeholders.