Boeing posts quarterly loss on 787, Starliner problems
October 27, 2021
By Sanjana Shivdas and Eric M. Johnson
(Reuters) – Boeing Co reported a quarterly loss on Wednesday as charges and expenses on its problem-plagued 787 Dreamliner and Starliner spacecraft programs dampened a ramp-up in 737 MAX deliveries and strong aircraft services revenue amid rebounding air travel.
The 737 MAX and 787 jetliners are integral to Boeing’s ability to recoup billions of dollars in lost sales from the pandemic and move beyond the safety scandal caused by two fatal crashes, while its Starliner has fallen behind dominating space rival Elon Musk’s SpaceX.
“Our commercial market is showing improved signs of recovery with vaccine distribution and border protocols beginning to open,” Chief Executive Dave Calhoun told employees in a letter.
Calhoun noted, however, that Boeing was still muscling through many engineering, production and safety certification problems across its aircraft portfolio, magnified by a severely weakened supply chain and the 737 MAX jet’s continued grounding in China.
On the 787 program, Boeing said it incurred abnormal costs of roughly $1 billion – or $183 million in the quarter – due to inspections and repairs from structural defects embedded in the jets over the last two years, confirming for the first time a price tag first reported by Reuters in February.
It has twice halted 787 deliveries, with the latest stoppage ongoing since May and resulting in an inventory of more than 100 jets worth $9 billion cash. Reuters reported on Tuesday the prospect of an imminent breakthrough on deliveries was fading on fallout over factory problems and with suppliers.
Boeing also booked a charge of $185 million on its long-delayed Starliner astronaut capsule it is developing under NASA’s Commercial Crew Program, due to delays and repairs from faulty fuel valves that sidelined the spacecraft after its last flight attempt in August.
Meanwhile, SpaceX’s Dragon capsule has ferried astronauts and supplies to orbit four times.
Boeing reported a net loss of $132 million, compared with a loss of $466 million a year ago, but eked out a small adjusted core operating profit of $59 million, pushing shares up 1.1% to $212.20 in premarket trading.
An adjusted loss of 60 cents per share compared with analysts’ average estimate of 20 cents per share, according to Refinitiv data.
Revenue rose 8% to about $15.3 billion, fueled by 737 MAX deliveries and growth in Boeing’s services unit as it sees recovery in the air travel market.
Boeing also said it was currently building nineteen 737 MAX jets per month, up from the 16 last quarter, with ongoing plans to push to 31 per month in early 2022.
It delivered sixty-two 737s in the quarter, the most since the first quarter of 2019 when the second of two fatal crashes grounded the plane worldwide and lurched Boeing into a crisis long overtaken by the global pandemic.
It also said it has been producing about two jets monthly at its South Carolina factory with plans to go back to an already slow rate of five a month at some future point.
(Reporting by Sanjana Shivdas and Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Steve Orlofsky)