Boeing Loss Widens Analysts Miss Big Revenue Drop

Boeing on Wednesday reported a quarterly loss of more than $3 billion quarterly loss compared with a $132 million loss a year earlier. Sales in the quarter were $15.96 billion missing analysts $17.76 billion forecast. Boeing’s defense business continued to be weighed down with losses of $2.8 billion on programs including the KC-46 tanker and Air Force One. $BA said it had positive operating cash flow in the third quarter. It reiterated the target of generating surplus cash for the full year. BA stocks closed sharply down at 133.79 -12.86 or -8.77% on the big miss and unstable world economy.

Boeing 777

Boeing Q3 22 Earnings:

Highlights

  • $3.3 billion quarterly loss, $5.49 loss per share, compared with a loss of 19 cents a share in the same period last year.
  • Adjusted loss per share: $6.18 vs. expected earnings per share of 7 cents. Excludes a FAS/CAS service cost adjustment
  • Revenue: $15.96 billion vs. $17.76 billion expected. Compared with $15.278 billion in the year-ago quarter.
  • Boeing generated operating cash flow of $3.19 billion during the quarter
  • Losses of $2.8 billion in its defense unit
  • Commercial unit’s revenue rose 40% from a year ago to $6.26 billion.
  • Total backlog of $381 billion at the end of the quarter, including over 4,300 commercial airplanes.
  • BA delivered 112 planes in the third quarter, up from 85 a year earlier.
  • Deliveries of its 787 Dreamliner resumed in August after a pause for much of the previous two years to address a series of manufacturing flaws.

The 737 MAX gets most of the attention, but the 777X has the potential to really alter the wide-body market. The 777X will be the world’s largest and most efficient twin-engine jet. Currently, all wide-body planes require four engines. Cutting that to two engines will save a lot on fuel and maintenance costs. Notably, a lot of wide-body planes are reaching the end of their useful lives.

Stock Market Reaction

A sea of red, Boeing investors are down even after 5 Years.

  • $BA 133.79 -12.86 (-8.77%) Market Close
  • 1 year -72.82 (-35.25%)
  • 5 year -125.48 (-48.40%)

Production

Boeing has dealt with production and regulatory problems that have impeded a recovery from two crises: a nearly two-year grounding of its 737 MAX after two fatal crashes in 2018 and 2019, and the pandemic’s hit to demand for new aircraft.

BA is trying to win federal regulator approval of new versions of that aircraft, the 737 Max 7 and 10, the smallest and largest in the family. Boeing faces a year-end deadline to do so without adding additional alerting systems for pilots, under new legislation passed in the wake of the crashes.

Alaska Airlines on Wednesday said it would exercise options to buy 52 Boeing 737 Max planes for its fleet and rights for 105 more of them through 2030. Boeing said the order was the largest in its 90-year history and the new planes will be used to replace older planes and for growth.

Calhoun and other aerospace executives have said supply chain problems and labor shortages are hindering increases in production.

“We’re realistic about the environment we face and are taking comprehensive action,” Calhoun wrote to staff Wednesday. “Within our production facilities, we’re not pushing the system too fast. We’re slowing down when necessary and working hard to ensure work gets completed in sequence.”

Charges

Boeing’s defense business continued to be weighed down by charges during the quarter.

  • Defense, Space and Security operating margin was impacted by $2.8 billion of losses on certain fixed-price development programs.
  • Boeing said this was driven by higher estimated manufacturing and supply chain costs, as well as technical challenges.

Outlook

““We’re squarely focused on maturing these programs, mitigating risks and delivering for our customers and their important missions,” he said, in a statement. “We remain in a challenging environment and have more work ahead to drive stability, improve our performance and ensure we’re consistently delivering on our commitments.”

The company said it had a total backlog of $381 billion at the end of the quarter, including over 4,300 commercial airplanes.


Source: Boeing

Live From The Pit

From The TraderCommunity Research Desk