(New York) Boeing suffered a hefty loss of $3.3 billion in the third quarter, mostly due to past charges for its defense programs, including the Air Force One presidential jet and the KC-46 tanker.
Updated yesterday at 17:51
“Our revenues and profits were significantly impacted by losses on fixed-price development programs in our defense businesses due to estimated higher manufacturing and supply costs as well as technical issues,” the report said. Message to staff Dave Calhoun, CEO of American Aircraft Company.
In an interview with CNBC, Mr. Calhoun acknowledged that the price obtained by former President Donald Trump in renegotiating the contract for Air Force One in early 2018 was too low and should not have been set as a reserve.
“Nearly every industry faces challenges related to supply, inflation, labor and the macroeconomic situation – and we are certainly no exception,” the chief executive added in his letter to staff.
For the July-September period, Boeing’s loss per share, adjusted for extraordinary items, was $6.18, with analysts expecting an increase of 2 cents.
Its turnover reached $16 billion, which is 4% more than in one year, but far from the $17.9 billion expected by the market.
On the good news side, however, Boeing said it is on track to achieve positive free cash flow in 2022, a metric that shows a company’s ability to invest or pay dividends to its shareholders.
But Boeing shares were down 8.8% at the close on Wall Street Wednesday night.
Pessimism about China
In defense, aviation and security programs, losses were $2.8 billion.
In addition to the KC-46 and Air Force One, losses were recorded on the MQ-25 tank drone, the T-7 military trainer aircraft, and also in the space flight programs.
“We can hope that the massive load on these programs will be the last for some time,” Michel Merluzeau of the AIR cabinet told AFP.
Boeing’s commercial division, on the other hand, benefited from the continued recovery in air travel, with the company generating revenue of $6.3 billion (+40%). However, it remains in the red ($-643 million).
“Demand has never been stronger and it’s happening all over the world,” Calhoun told CNBC.
On the other hand, he was much more pessimistic about China, estimating during a conference call with Wall Street analysts that resuming deliveries of the 737 MAX to its Chinese customers was unlikely due to “geopolitical risks between Washington and Beijing.
The MAX, the US aircraft manufacturer’s flagship model, has been banned from flying in China since 2019 after two fatal accidents.
While the MAX-9 has returned to service in the rest of the world, the MAX-7 and MAX-10 variants have not yet been certified in the United States. Boeing hopes to get a waiver from the US Congress by the end of the year to extend the certification deadline.
“We remain confident that we can achieve an extension of this deadline because it is the safest response,” Mr. Calhoun said during a presentation of results to analysts.
Boeing delivered 112 planes to its customers in the third quarter, including 9 examples of the 787. Deliveries of the long-haul jet, suspended more than a year after manufacturing defects were discovered, resumed in August.
And in the same period, 88 examples of the 737 MAX were delivered.
US-based Alaska Airlines also announced Wednesday an order for 52 737 MAX aircraft, including 42 MAX-10s.
“In our analysis, commercial production has not stabilized and will not return to a more regular and sustainable pace until the fourth quarter of 2023,” Mr Merluzeau said, however.
Boeing is unlikely to “reach 400 MAX deliveries this year, we expect a number closer to 350 or 360,” the expert said.