Boeing shares were in free-fall early Wednesday after the aviation giant reported a $1.2 billion loss in an ugly quarter weighed down by fresh one-time costs on its Russia business, the Air Force One presidential jet and the new 777X plane.
Shares were down around nine percent at $152.30 in early trading after Boeing’s results badly missed analyst expectations and revealed yet another delay with its 777X plane.
The loss marks the latest round of disappointing results for the commercial jet maker, which has also suspended deliveries of its 787 plane due to a series of production issues.
Offsetting those negatives somewhat has been the improvement in the commercial air market, as well as progress on ramping up deliveries of the 737 MAX, which was grounded for more than a year following two deadly crashes.
Chief Executive Dave Calhoun acknowledged that the “first quarter presented new challenges,” but urged a long-term perspective on the company.
“We are a long-cycle business, and the success of our efforts will be measured over years and decades, not quarters,” Calhoun said in a message to employees.
“The deliberate actions we’re taking now will drive stability in our operations and position us for long-term, sustainable performance.”
The company’s loss was more than twice the $537 million shortfall in the year-ago period. Revenues came in at $14 billion, down eight percent.
Production costs rising
Boeing said the new timeframe for the 777X, “reflects an updated assessment of the time to meet certification requirements,” according to a press release, which also announced plans for a “temporary pause” on production for the aircraft through 2023.
The big US aerospace company now expects first deliveries of the plane in 2025, resulting in a $1.5 billion hit to profits.
Work on the 777X began in 2013, but the timeframe has been repeatedly pushed back as Boeing works to address certification questions from US air safety regulators.
Under the most recent schedule prior to Wednesday’s deliveries, Boeing was to commence deliveries in late 2023.
In his note to employees, Calhoun said he remained “confident” in the 777X, adding that, “airplane programs serve our market for several decades, and it is important we take the time now to position for long-term success.”
Boeing’s defense division booked about $1 billion in costs on the presidential plane, Air Force One, and a second military aircraft, the T-7A Red Hawk.
Air Force One suffered from “higher supplier costs, higher costs to finalize technical requirements and schedule delays,” while the T-7A was beset with “supply chain constraints, Covid-19 and inflationary pressures,” Boeing said.
Boeing has suspended engineering support, flight training and other services for Russia customers. The company had $212 million in costs in the quarter linked to Ukraine.
Boeing announced no new additional costs connected to the 787 Dreamliner, for which deliveries have been halted since May while it works to address problems raised by US air safety regulators.
Calhoun offered no timeframe on resuming deliveries, but said the company had submitted its certification plan to the Federal Aviation Administration, an “important step,” he said in his message.
“We also completed the required work on initial airplanes and are conducting Boeing check flights,” Calhoun said. “We will continue to give our teams the time they need, engage transparently and follow the lead of our regulator on next steps and timing.”
On the positive side, Boeing reported a jump in 737 MAX deliveries during the quarter and said it was on track to lift production of the plane to 31 per-month in the second quarter.
Calhoun also offered an upbeat view on the aviation market, saying the “commercial market recovery is broadening and demand is solid as operators look to bring capacity back online and plan for growth.”
Shares sank 9.0 percent to $152.04 in early trading.