An American Airlines Boeing 737 MAX 8 flight from Los Angeles approaches for landing at Reagan National Airport shortly after an announcement was made by the FAA that the planes were being grounded by america in Washington, U.S. March 13, 2019.Â
Joshua Roberts | Reuters
Boeing will burn through money this yr and deliveries of recent planes won’t improve within the second quarter from the primary, because the manufacturer deals with a number of production challenges tied to its bestselling planes, the corporate’s CFO, Brian West, said Thursday.
A month ago, West forecast Boeing would generate free money flow “within the low single-digit billions.” The brand new forecast shows the mounting costs of the plane maker’s latest crises.
Boeing burned through nearly $4 billion in money in the primary quarter and West said that figure may very well be similar or “possibly a bit of worse” within the second quarter, but that the corporate would likely return to generating money within the second half of 2024.
The corporate’s aircraft deliveries in the primary quarter fell to the bottom level because the pandemic. The majority of a plane’s price is paid when it’s handed over to a customer.
Boeing’s shares were down 7% in afternoon trading after West’s comments at a Wolfe Research industry conference.
“We’ve got frustrated and disenchanted our customers due to a few of the production supply chain issues that we’re up against,” West said on the conference. “And while I understand that frustration, an important thing we will do for our customers and the provision chain within the industry is to give attention to the actions which might be underway as we speak in order that we could stabilize this production system, improve quality, and get more predictable.”
Boeing CEO Dave Calhoun in March said he would step down by the tip of the yr, and the corporate replaced the chairman and chief executive of its industrial airplane unit. Leading as much as the shake-up, CEOs of major airline customers complained about delivery delays and difficulty planning flights due to surprise disruptions.
Boeing’s latest production issues surfaced after a door plug blew out midair from an almost latest 737 Max 9 at first of the yr, just as the corporate was attempting to repair years of reputational damage from two fatal Max crashes in 2018 and 2019.
The accident increased federal scrutiny of the corporate, whose executives have vowed to stamp out production flaws and regain the trust of regulators, airline customers and the general public.
Next Thursday, Boeing leaders are set to satisfy with the Federal Aviation Administration to present the corporate’s plan to enhance its quality control, the FAA said. The agency gave Boeing 90 days to finish the plan starting in late February.
Other problems have also sprung up, including a pause on deliveries of 737 Max planes to China to review batteries for the cockpit voice recorder. Boeing said in an announcement that it’s working with “our Chinese customers on the timing of their deliveries because the Civil Aviation Administration of China completes its review of batteries contained throughout the 25-hour cockpit voice recorder assembly unit.”
Parts shortages have also slowed deliveries of 787 Dreamliners, Boeing has said. American Airlines last month said it could cut some international flights due to delays for the wide-body jets. Other carriers, including United Airlines and Southwest Airlines, said they’d to reduce a few of their growth and hiring plans due to delayed Boeing jets.
Don’t miss these exclusives from CNBC PRO
