Boeing declined to issue a financial forecast for 2024, breaking a tradition of providing guidance to deal with a string of quality slips that culminated in a near-catastrophic panel blowout on a 737 Max.
Fourth-quarter earnings, cash flow and revenue all surpassed analysts’ expectations, based on results published on Wednesday by the US plane maker. But the report took a back seat to Boeing’s latest 737 Max crisis and its response to the ensuing regulatory clampdown.
“While we often use this time of year to share or update our financial and operational objectives, now is not the time for that,” its chief executive officer Dave Calhoun told employees in a memo.
“We will simply focus on every next airplane while doing everything possible to support our customers, follow the lead of our regulator and ensure the highest standard of safety and quality in all that we do.”
Mr Calhoun is expected to use a conference call with analysts later in the day to outline the path forward for Boeing as the Federal Aviation Administration steps up scrutiny of its manufacturing and supplier systems. New FAA chief Michael Whitaker has capped 737 production at current levels until quality improves, and vowed to aggressively expand oversight at all of Boeing’s factories.
Investors have long been accustomed to poring over Boeing’s financial metrics and annual targets, with swings in its cash generation reverberating through its shares following results. The fourth-quarter report is particularly key for Boeing as the plane maker typically puts forth an annual forecast for cash flows and deliveries of its two most important products, the 737 Max and the 787 Dreamliner.
Now Boeing is asking them to be patient, with so much at stake as customers, regulators and lawmakers in Washington demand Mr Calhoun take meaningful steps to address the spate of manufacturing shortfalls that have cropped up in the post-Covid era.
“The full ramifications of the latest Max safety issues have yet to be felt, and we see it as telling that Boeing has not provided any update on its outlook or guidance in this morning’s release,” analyst Robert Stallard of Vertical Research Partners told clients on Wednesday. “Management may provide more on the call, but its immediate fate is arguably in the hands of the FAA.”
In a CNBC interview, Mr Calhoun apologised to United Airlines chief executive Scott Kirby, who has wavered on the airline’s commitment to the coming Max 10 model over delays in its certification.
In his message to employees, Mr Calhoun emphasised the need to enlist workers in its bid to re-establish quality.
“Our people on the factory floor know what we must do to improve better than anyone,” Calhoun said, encouraging staff to raise issues that need addressing. “We will go slow, we will not rush the system and we will take our time to do it right.”’
The strong close to 2023 provided a glimpse of Boeing’s expectations for a pivotal 2024 before the January 5th Alaska Airlines incident. The company’s commercial aircraft division posted its first operating profit since the start of 2019, when the 737 Max was grounded globally following two fatal crashes.
For the fourth quarter, Boeing reported an adjusted loss of 47 cents a share, compared to the 76 cent loss expected by analysts, based on data compiled by Bloomberg. Revenue of $22 billion (€20 billion) was better than the $21.1 billion (€19.4 billion) predicted by Wall Street. Free cash flow was $2.95 billion (€2.7 billion), also surpassing the $2.09 billion (€1.92 billion) estimate.
The shares rose 4 per cent as of 9:32am in New York. Through Tuesday’s close, Boeing stock had tumbled 23 per cent so far this year, the worst performance among the 30-member Dow Jones Industrial Average. – Bloomberg
