Boeing earnings: Plane maker beats on Q4 results but suspends guidance on 737 Max fallout
Boeing CEO Dave Calhoun said 'now is not the time' to share its financial objectives.
Boeing (BA) reported fourth quarter results that topped expectations, but the plane maker suspended its 2024 guidance as it continues to deal with the fallout from an accident involving an Alaska Airlines 737 Max 9, which suffered a door “plug” blowout while in flight in early January.
For the quarter, Boeing reported top line revenue of $22.02 billion vs. $21.07 billion expected, according to Bloomberg consensus estimates. Boeing's commercial sales revenue for Q4 came in at $10.48 billion vs. the $10.04 billion expected. From a profitability standpoint, Boeing reported an adjusted loss per share (or “core,” as Boeing calls it) of $0.47 vs. a loss of $0.76 estimated.
Boeing reported operating cash flow of $3.38 billion and a core operating margin of 0.4%, compared to last year's margin of negative 3.2%.
On the earnings call Wednesday morning, Boeing’s CEO David Calhoun gave a direct apology to Alaska Air and other customers impacted by the 737 Max 9 grounding and investigation.
“Whatever conclusions are reached, Boeing is accountable for what happened," said Calhoun."We caused the problem, and we understand that."
The CEO highlighted additional oversight and quality controls measures implemented at Boeing and its suppliers.
"Quality and safety must come above all else," said Calhoun.
“We are not issuing financial outlook for 2024. Now is not the time for that,” added Calhoun.
For 2023, Boeing had a free cash flow forecast of $3 billion to $5 billion and an operating cash flow estimate of $4.5 billion to $6.5 billion. Boeing declined to provide a 2024 update on those projections.
Wall Street wasn't too concerned about the lack of guidance, with Boeing shares up more than 6% in early trading.
"The fact that there's no guide here isn't really a suspension," Melius Research managing director Robert Spingarn said in an interview with Yahoo Finance. "It's just a deferral, if you will, because of the uncertainty."
As for its production guidance, Boeing says it will cap 737 Max production at 38 planes per month until the FAA is satisfied with safety and quality. Last week the FAA limited the plane maker’s Max jet production.
Boeing said it will produce five 787 Dreamliners per month. It's still planning to increase output to 10 per month. Production for the 777X wide-body planes will continue as planned.
Earlier this month, Boeing reported that it delivered 528 planes in 2023 and booked 1,314 net new orders in 2023, up from the 480 deliveries and 774 net new orders it had in 2022.
Across its commercial jet portfolio, Boeing delivered 396 of its 737 jets last year, hitting its goal of at least 375 planes but missing its original target of 400 to 450 jets. Boeing also delivered 73 of its 787 Dreamliners in 2023, meeting its goal of 70 to 80. Finally, Boeing said its order backlog now stands at 5,626, up from 5,324.
As for the 737 Max 9 jet at the center of the Alaska Airlines fiasco, those jets are heading back into service for Alaska and United Airlines after the FAA approved Boeing’s inspection and maintenance plan. Boeing is still under regulators' scrutiny, however, as the FAA halted plans for Boeing to increase production of the 737 Max 9. The FAA also expanded oversight of Boeing and its suppliers in the plane’s production process, as well as for the investigation into its compliance with manufacturing requirements.
A different jet in the Max family, the 737 Max 7, also suffered another setback this week. Boeing withdrew a request to the FAA to grant it a safety waiver for the plane after Boeing reported an issue with the plane’s engine inlet de-icing system last year. Boeing now says it will come up with an “engineering solution that will be completed during the certification process." The 737 Max 7 is a smaller version of the Max plane that hasn’t been certified by the FAA yet.
The CEOs of United and Alaska Airlines, two of the biggest purchasers of 737 Max 9 jets, have expressed frustration over Boeing’s continued manufacturing problems with the plane.
“We will earn trust back through demonstrated action and a commitment to total transparency,” said Calhoun during the earnings call.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
Read the latest financial and business news from Yahoo Finance
