February 23, 2024

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Airplane maker beats fourth-quarter results but suspends guidance on 737 Max fallout

Airplane maker beats fourth-quarter results but suspends guidance on 737 Max fallout

Boeing (BA) reported. Fourth quarter results That exceeded expectations, but the plane maker has suspended its guidance for 2024 as it continues to deal with the fallout from an Alaska Airlines 737 MAX 9 accident, which suffered a door “plug” that exploded while in flight in early January.

During the quarter, Boeing posted revenue of $22.02 billion versus $22.02 billion. $21.07 billion is expected, according to Bloomberg estimates. Boeing's commercial sales revenue for the fourth quarter was $10.48 billion versus $10.48 billion. Expected $10.04 billion. From a profitability standpoint, Boeing reported an adjusted loss per share (or “basic,” as Boeing calls it) of $0.47 versus $0.47. Loss of $0.76 estimated.

Boeing reported operating cash flow of $3.38 billion and an underlying operating margin of 0.4%, compared to last year's margin of 3.2%.

But it's the suspension of Boeing's future guidance that will worry investors.

Archive - A woman walks next to Boeing mannequins.  Airplanes, including the manufacturer's new Boeing 777X, at the Dubai Air Show in Dubai, United Arab Emirates, Wednesday, November 11, 2019. January 17, 2021. Boeing reports earnings on Wednesday, January 17.  Nov. 31, 2024. (AP Photo/Jon Gambrell, File)

A woman walks near Boeing models. Aircraft, including the manufacturer's new Boeing 777X, at the Dubai Air Show in Dubai, United Arab Emirates, Wednesday, Nov. 11, 2019. Nov. 17, 2021. (AP Photo/Jon Gambrell, File) (News agency)

“While we often use this time of year to share or update our financial and operational goals, now is not the time,” Boeing CEO Dave Calhoun said in a letter to employees. “We will simply focus on every incoming aircraft while doing everything we can to support our customers, following in the footsteps of our regulatory body and ensuring the highest standards of safety and quality in everything we do. Ultimately, this is what will drive our performance.”

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For example, for 2023, Boeing had free cash flow forecasts of $3 billion to $5 billion and operating cash flow estimates of $4.5 billion to $6.5 billion. Boeing declined to provide an update to this forecast for 2024.

Wall Street wasn't too concerned about the lack of guidance, as Boeing shares rose more than 6% in early trading.

“The fact that there is no evidence here does not really mean a comment,” Robert Spingarn, managing director of Melius Research, said in an interview with Yahoo Finance. “It's just a postponement, if you will, because of the uncertainty.”

As for production guidance, Boeing says it will cap 737 MAX production at 38 planes per month until the FAA is satisfied with safety and quality standards. Last week, the Federal Aviation Administration (FAA) limited production of the planemaker's Max jets.

Boeing said it will produce five 787 Dreamliners per month. It still plans to increase production to 10 per month. Production of the wide-body 777X will continue as planned.

Earlier this month, Boeing reported that it delivered 528 aircraft in 2023 and booked 1,314 net new orders in 2023, up from the 480 deliveries and 774 net new orders it had in 2022.

Across its commercial aircraft portfolio, Boeing delivered 396 of 737 aircraft last year, meeting its goal of at least 375 aircraft but missing its original goal of between 400 and 450 aircraft. Boeing also delivered 73 787 Dreamliners in 2023, meeting its goal of delivering 70 to 80 aircraft. Finally, Boeing said its backlog of orders now stands at 5,626, up from 5,324.

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As for the 737 MAX 9 that was at the center of the Alaska Airlines failure, these planes will return to service with Alaska and United Airlines after the Federal Aviation Administration approved Boeing's inspection and maintenance plan. However, Boeing is still under regulatory scrutiny, with the Federal Aviation Administration halting Boeing's plans to ramp up production of the 737 MAX 9. The FAA has also expanded oversight of Boeing and its suppliers in the plane's production process, in addition to investigating its operations. Compliance with manufacturing requirements.

Another plane in the Max family, the 737 Max 7, suffered another setback this week. Boeing has withdrawn a request to the Federal Aviation Administration (FAA) to grant a safety waiver for the plane after Boeing reported a problem with the plane's engine inlet de-icing system last year. Boeing now says it will come up with “an engineering solution that will be completed during the certification process.” The 737 Max 7 is a smaller version of the Max that has not yet been certified by the FAA.

The CEOs of United and Alaska Airlines, two of the largest buyers of the 737 MAX 9, said: They expressed frustration Due to Boeing's ongoing manufacturing problems with the plane.

“As we move forward, we will support our customers, work transparently with our regulator, and ensure all procedures are completed to earn the trust of our stakeholders,” Boeing's Calhoun said in a statement.

Pras Subramanian is a reporter for Yahoo Finance. You can follow it Twitter and on Instagram.

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