Boeing blew through $4bn last quarter in response to 737 Max blowout incident
Boeingburned through nearly $4bn in the last quarter as it scrambled to contain a safety crisis unleashed by a midflight blowout of a cabin panel on a brand-new 737 Max 9 jet.
The US planemaker has been left reeling by the incident in January, which raised questions about its bestselling commercial plane, and warnings from a whistleblower about other sections of its production line.
After racing to reassure regulators, airlines and passengers, Dave Calhoun, Boeing’s chief executive, and Larry Kellner, chair of its board, last month announced plans to resign.
While the company reported its first quarterly revenue drop in almost two years on Wednesday, its results nevertheless beat expectations on Wall Street, which were lowered after January’s blowout during an Alaska Airlines flight prompted Boeingto slow production.
The company said its first-quarter cash burn, a metric closely watched by investors, was $3.93bn; lower than the average analyst forecast of $4.49bn.
In March, Boeing indicated it would use between $4bn and $4.5bn as it grappled with the biggest safety crisis since the crashes of two of its Max 8 jets, in 2018 and 2019, in which 346 people were killed.
Revenue at the firm sank 8% in the first three months of the year, to $16.57bn. Net losses narrowed to $355m, from $425m during the same period of 2023.
Shares in Boeing, which have retreated by a third in recent months, rose 2% during early trading in New York.
Since the Alaska incident, the US Federal Aviation Administration has imposed a cap on production of Boeing’s strong-selling 737 Max aircraft line. The FAA also has told Boeing to develop a comprehensive plan to address “systemic quality-control issues”.
“Well it could have been worse,” Vertical Research Partners analyst Robert Stallard said in a note. “While the loss and the cash outflow are not as bad as feared, the company is still clearly facing some serious challenges in the commercial aircraft division that will take some fixing.”
Before the report, Calhoun said in a letter to employees that Boeing was “in a tough moment”, slowing the system to improve quality and safety. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else,” he added.
While Boeing has yet to identify its next boss, Calhoun told the CNBC news network on Wednesday that he believes Stephanie Pope – currently the firm’s chief operating officer, and head of its commercial airplanes arm – has the potential to run the whole company.
Some analysts have speculated in recent weeks that Boeing could choose an outsider, or at least a former insider who has since left the firm, to replace Calhoun.
Cited names include Larry Culp, who led General Electric before the conglomerate’s breakup, and now leads GE Aerospace; and Greg Smith, the chairman of American Airlines and former chief financial officer at Boeing.