Ongoing Difficulties and Financial Struggles for Boeing
The once-dominant aircraft manufacturer continues to face headwinds, reporting its seventh consecutive quarter of losses excluding one-time items. Supply chain woes, defense program struggles, and a competitive market continue to weigh heavily on the company's bottom line
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Boeing experienced further losses due to the disruption of its supply chain, which led to a decline in profitability beyond what was forecast.
The organization revealed an output of $1.27 per share, apart from extraordinary, one-time charges and profits. This was a vast improvement from the $2.75 per share it lost on that basis in the previous year, yet it denoted the seventh sequential quarter in which Boeing registered a negative number, apart from exceptional items.
The grounding of the 737 Max in March of 2019, which was a result of two deadly crashes that killed 346 people, has resulted in Boeing not being able to report a quarterly profit without the aid of special items.
Analysts surveyed by Refinitiv predicted a loss of $1.07 per share, but the outcome was worse than expected. As of now, it appears that the red ink won't be ending anytime soon, as an additional loss is anticipated for the current quarter. The outlook for the second half of the year is only slightly more optimistic, with narrow profits anticipated - however, this is expected to result in Boeing's fifth consecutive year of annual loss.
It was revealed earlier in April that a notable quantity of Boeing 737 Max aircrafts in the production phase had been impacted by an irregular manufacturing process from one of the suppliers, which will have consequences for imminent deliveries and fabrication.
However, Boeing maintained its forecast that it will have a good money flow in 2020, and said that it anticipates constructing 38 737 Max jets each month later in the year, with plans to hand over 400 to 450 of those aircraft.
The higher-ups of the firm revealed that, notwithstanding the recent issues with the 737 Max, their financial outcomes demonstrate growth for the business, as their deficit is less than it was in the same period last year.
CEO Dave Calhoun voiced his opinion that they have been making "real progress" and "steady progress" in their recovery, while noting that there is still work to be done. He concluded by expressing his satisfaction with the operational and financial outlook.
Calhoun made it clear that Boeing and Spirit AeroSystems [SPR] (https://money.cnn.com/quote/quote.html?symb=SPR&source=story_quote_link) have the capability to address the issues found in the 737 Max production. He also affirmed that this won't pose any danger to the aircraft already in service. Yet, due to the delivery delay in the coming months, some of Boeing's customers won't be able to carry out the flight plans they had for this summer.
He expressed regret for the situation.
Unfortunately for Boeing, the Max is not the sole aircraft that has caused them trouble. The 787 Dreamliner had to cease deliveries for about one year due to quality control difficulties, with distribution only resuming in September. The company recorded a $379 million booster in expenses for the 787 program in the opening quarter, in addition to a confidential amount of recompense to airlines whose deliveries were put off. Moreover, they still maintain some 787 Dreamliners which need to be modified in their stock.
Boeing, which typically does not stockpile finished airplanes but instead ships them right away after construction is done, has had to keep an abnormal number of planes in its inventory since it kept making the 737 Max during the 20-month restriction. Currently, it is stuck with 225 of them, with 138 of these planes waiting to be sent to China.
Recently, the Chinese aviation authorities have approved the 737 Max to fly in the country, however, no Chinese airlines have accepted the delivery of these planes yet. The heightened trade disagreements between the United States and China have barred Boeing from entering this essential market for a few years now. This is evidenced.
At the meeting with investors, Calhoun declared that they were putting in a lot of effort to recapture China.
Boeing (BA)'s promises of cash flow and total 737 Max deliveries in one year seemed to give a boost to their shares, increasing them by 3% during midday trading, despite the ongoing problems and greater-than-expected losses.
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