Boeing narrowed its losses at the end of last year, but its CEO said now is "not the time" for financial targets as the manufacturer grapples with the fallout from a fuselage panel that blew out midflight on one of its new 737 Max 9s earlier this month.
Boeing CEO Dave Calhoun, who took the helm of the aircraft giant four years ago in the wake of two deadly crashes of the Max, is again under pressure to clean up the company's reputation with airline customers, regulators and the public after the Jan. 5 accident in which a panel blew out on Alaska Airlines Flight 1282 as the plane climbed out of Portland, Oregon, leaving a gaping hole in the side of the plane.
Calhoun commended Alaska for grounding Max 9 planes after the accident. The Federal Aviation Administration later grounded the fleet.
"Alaska airlines did exactly what companies like Boeing would hope that they do at moment like that and that is why the airline industry is as safe as it is," Calhoun said on an earnings call on Wednesday. "We caused the problem. And we understand that."
Federal investigators are examining whether the door plug was improperly installed before the Max 9 plane was handed off to Alaska late last year. The National Transportation Safety Board is expected to release a preliminary report on the accident in the coming days.
The accident Alaska 1282 was the most serious in a series of apparent production flaws, which have slowed down deliveries of new planes, and angered some of the company's biggest airline customers in the process, while main rival Airbus continues to surpass Boeing in delivering new aircraft.
"While we often use this time of year to share or update our financial and operational objectives, now is not the time for that," Calhoun said in a message to employees Wednesday. "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. Ultimately – that is what will drive our performance."
Boeing reaffirmed its 2025 and 2026 financial targets that it laid out in a 2022 investor day: reaching about $10 billion of free cash flow and $100 billion in revenue by as early as next year.
"We're still confident in the goals we laid out for '25, '26 although it may take longer in that window than originally anticipate and we won't rush the system," Chief Financial Officer Brian West said on an earnings call on Wednesday.
Boeing delivered 528 airplanes to customers last year, up from 480 in 2022. That includes the Max, 787 Dreamliners and others. Boeing in 2022 said it was targeting annual deliveries of about 800 planes next year or in 2026.
The FAA last week cleared the Max 9 to fly again but said it would halt Boeing's planned ramp-up in production, which the manufacturer had aimed to get up to about 50 Max planes a month in 2025 or 2026. Boeing confirmed on Wednesday that it is building 38 Maxes a month.
The Boeing 737 Max is the company's bestselling plane. A delay to production increases could hamper Boeing's financial targets and affect suppliers that have been preparing for higher output, as well as customers counting on new planes to cater to post-Covid travel demand.
Calhoun has visited company and supplier production lines as well as lawmakers on Capitol Hill in the weeks since the incident, vowing transparency and to fix any shortfalls in its manufacturing. The company had the first of several production stand-downs last week to discuss with workers manufacturing problems and other potential improvements to Boeing's processes.
"Our people on the factory floor know what we must do to improve better than anyone. We should all seek their feedback, understand how to help and always encourage any team member who raises issues that need to be addressed," Calhoun said in his note to employees on Wednesday. "We will go slow, we will not rush the system and we will take our time to do it right."
Boeing executives are also facing questions about how the accident and added scrutiny from the FAA could affect the certification timeline for the Max 7 and Max 10, the smallest and largest models of the company's bestselling planes.
On Monday, after pressure from lawmakers, Boeing said it won't seek a safety exemption for the Max 7 related to a de-icing system, but instead will work on an engineering solution.
Here's how Boeing performed in the last three months of 2023 compared with what analysts polled by LSEG, formerly known as Refinitiv, expected:
- Adjusted loss per share:Â 47 cents vs. 78 cents expected
- Revenue:Â $22.02 billion vs. $21.1 billion expected
Boeing posted a net loss of $30 million, or 4 cents a share in fourth quarter, narrowing from a $663 million loss, or $1.06 a share, a year earlier. Adjusting for one-time items, Boeing reported a net loss of 47 cents per share.
Its free cash flow of $2.95 billion in the quarter topped analysts' expectations. Revenue grew 10% year over year to $22.02 billion.
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