Boeing loses $234M in 2nd quarter
Firm has 1st down quarter since ’09, cuts earnings outlook
NEW YORK — Boeing, absorbing billions in writedowns related to two of its newest commercial jets and a military fuel tanker, reported a loss of $234 million in the second quarter, its first quarterly red ink in nearly seven years.
Yet revenue for the Chicago aerospace giant rose 1 percent to $24.8 billion.
Charges totaling $3 billion before taxes led to Boeing’s first down quarter since the third quarter of 2009, when it lost $1.6 billion.
Boeing also lowered its fullyear earnings estimate to the range of $6.10 and $6.30 per share, from $8.15 and $8.35. The revenue outlook remains the same at $93 billion to $95 billion.
Despite the rough quarter, analysts believe that Boeing showed underlying strength and its shares rose $1.11 Wednesday to close at $135.96.
The report of a quarterly loss comes days after one of Boeing’s key suppliers, Rockwell Collins, publicly called out the company for being behind on $30 million to $40 million in bills for various electronic and cockpit equipment.
“Boeing is delinquent and Boeing has contributed to some of our underperformance here this quarter in cash flow, which is disappointing, but we’re working that with them,” Rockwell Collins Chief Executive Officer Kelly Ortberg said Monday when the company posted earnings.
Boeing executives said Wednesday during a conference call that they were trying to meet industry standards and moving to a more orderly cycle.
In the second quarter, adjusted per-share loss was 44
cents, which was better than Wall Street had expected. Analysts surveyed by Zacks Investment Research had projected a loss of 88 cents per share. Boeing had already warned analysts of the heavy charges for the quarter, giving them time to adjust their estimates.
The charges for the quarter included a $1.2 billion writedown, before taxes, on its 7478 aircraft. Boeing attributed the loss to weakness in the air cargo market, saying that the overall number of freighter jets produced will be lower than originally estimated. The company will continue to manufacture one of the giant jets every two months but no longer has plans to double the production rate to one per month in 2019.
Boeing also decided against spending money to refurbish and sell its two remaining 787 Dreamliner test aircraft. The jets were built in 2009 and both have spent more than 6,700 hours in flight and ground testing. That charge reached $1.2 billion before taxes.
Finally, Boeing took another write-off on the Air Force’s KC46
Pegasus Tanker, a midair refueling plane Boeing is building off its commercial 767 jet frame. Problems were found during recent test flights, and Boeing is working to fix them. The Air Force was supposed to take delivery of 18 tankers by August 2017, but the new schedule now targets January 2018. The delay and changes will cost Boeing $354 million before taxes, on top of more than $1 billion in charges already taken on the tanker.
“The underlying operating performance of the company remains solid with our commercial and defense teams again delivering strong revenues and operating cash flow. Actions taken during the quar- ter that impacted our earnings were the right, proactive steps to reduce risk and strengthen our position for the future,” CEO Dennis Muilenburg said in a company release.
The increased revenue mostly came from faster production of Boeing’s commer- cial planes. The commercial division accounts for about two thirds of the company’s revenue, with its defense and space divisions making up the rest.
Boeing takes a deposit
when a jet order is made but doesn’t collect the bulk of the cash until a jet is delivered. The company delivered 199 commercial jets during the quarter, up from 197 during the same period last year and 181 two years ago.
The company repurchased 15.3 million shares for $2 billion over the quarter. Boeing also paid $691 million in dividends, reflecting an approximately 20 percent increase in dividends per share compared with the same period the prior year.
Boeing shares have fallen almost 7 percent since the beginning of the year, while the Standard & Poor’s 500 index has increased 6 percent.