PanamaTimes

Wednesday, Feb 21, 2024

Cost overruns lead to an unexpected deep loss for Boeing

Cost overruns lead to an unexpected deep loss for Boeing

The planemaker is trying to emerge from the overlapping crises of COVID-19 and the grounding of its best-selling model.

Boeing Co has unexpectedly reported a deeper loss in the third quarter of 2022 as cost overruns led to heavy losses at its ailing defence business, underscoring the challenge the company faces in turning around its fortunes.

The planemaker, based in Virginia in the United States, is trying to emerge from overlapping crises: the COVID-19 pandemic and the grounding of its best-selling model after fatal crashes, which have left it with a pile of debt.

However, a run-up in costs in Boeing’s defence contracts along with persistent supply-chain constraints and regulatory hurdles have made it tougher to shore up its fortunes.

In the quarter through September, the company reported on Wednesday a $2.8bn charge on its Air Force One and refueling tanker programme, among others.

The latest write-down came a day after Reuters reported Boeing has appointed senior troubleshooter Steve Parker to help turn around loss-making programmes in its defence unit.

Rising cost pressures over the last few months have hampered fixed-price contracts for US aerospace and defence firms, prompting an industry body to ask the US Congress for inflationary relief.

Since these contracts tend to have fixed prices, Boeing is required to absorb cost increases. Agency Partners estimates the company’s various fixed-price defence contracts have already resulted in $8.8bn of charges.

“Every quarter, one hopes that the program specific bad news has come to an end, but then we get another installment – maybe this is It? Probably not,” analysts at Agency Partners said in a note.

Boeing’s shares were down 1.7 percent at $144.55 in morning trading.


Supply-chain delays


The company further cut estimates for 737 MAX deliveries this year. It now expects to deliver 375 planes this year, lower than an earlier target of the “low 400s”.

Chief Executive Dave Calhoun said he is confident the planemaker will get an extension from the US Congress of a key deadline to get the MAX 7 and MAX 10 certified.

The company said while demand for commercial planes remains strong, supply-chain constraints continue to challenge the industry.

It singled out delays in jet engine deliveries as the primary constraint in stabilising and increasing production rates for 737 jets. It called the supply chain “a key watch item” in the near term for the production and deliveries of 787 jets.

Boeing expects its supply chain to remain challenged over the course of 2023. To ramp up production, the company said it has added more than 10,000 employees this year and is investing in training and development to improve productivity.

It retained its forecast of generating cash this year after reporting a free cash flow of $2.9bn in the September quarter, higher than the $1.02bn expected by analysts in a Refinitiv survey.

Adjusted loss per share in the third quarter widened to $6.18 from $0.60 a year ago. Quarterly revenue rose 4 percent to $15.96bn.

Demand at the global services business that provides spare parts and services such as jet conversions was a bright spot in the quarter through September, with revenue rising 5 percent.

Newsletter

Related Articles

PanamaTimes
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
Former Bolivian President Evo Morales Denied Eligibility for 2025 Re-Election
Venezuela's Maduro Condemns 'Provocation' as UK Sends Warship to Guyana Venezuela's President Maduro has condemned the UK's deployment of the warship HMS Trent to Guyana as a hostile act amid ongoing border tensions
×