Boeing reported a fourth-quarter operating loss of $650 million, surprising Wall Street analysts who expected the aviation giant to turn a profit.
The company blamed the unexpected loss on “abnormal production costs” as it tried to both deliver the remaining backlog of 737 Max jets and ramp up deliveries of 787 Dreamliners. The company’s production of the 787 remains below normal rates.
In addition, Boeing had to pay an undetermined amount of compensation to 787 customers whose deliveries were delayed by approximately one year.
Boeing has reported just two profitable quarters in the nearly four years since the 737 Max grounded. After two fatal crashes that killed 346 people, the plane was grounded for 20 months from March 2019. Then a year later the pandemic all but halted demand for flights and new planes – prompting the cancellation of hundreds of aircraft orders and the accumulation of losses for Boeing.
Still, the industry has shown signs of recovery, and analysts polled by Refinitiv had expected Boeing to earn 26 cents a share. Instead, he reported a loss of $1.75 per share. So while that’s an improvement from the $7.69 per share loss in Q4 2021, it’s also a big disappointment.
Boeing’s problems in the fourth quarter are linked to its few difficult years since the 737 Max crisis.
For one, the company was struggling with an excess inventory of hundreds of jets. Typically, Boeing does not hold inventory, as planes are delivered to customers shortly after completion.
But even though the 737 Max planes could not be delivered during the grounding, Boeing continued to build them, in part to keep its suppliers in business. Then it was forced to find new buyers for some of those planes due to customer orders being canceled during the pandemic.
Beyond the Max, the FAA reported quality issues with the company’s 787 Dreamliners that prevented it from delivering this model. Although the Dreamliner was not grounded like the Max, it still affected the business: much of Boeing’s abnormal production costs last quarter were due to the need to rework the Max and Dreamliner jets , CEO Dave Calhoun said in an interview on CNBC on Wednesday.
Supply chain issues are improving, Calhoun added, but they are not behind the company or the aerospace industry as a whole. margins throughout the year as its Max and Dreamliner inventory is liquidated.
Boeing delivered 152 commercial jets in the quarter, up 54% from a year ago and better than its own target.
But digging deeper into the financial results highlights a potential problem: It appears Boeing received lower prices on some of its planes than analysts had expected.
That’s because the company’s revenue was lower than expected, coming in at just under $20 billion. Although that was Boeing’s highest revenue since the start of the pandemic, it was about $360 million below analysts’ consensus estimate. The combination of better-than-expected deliveries but lower-than-expected revenue suggests lower pricing.
Boeing tried to give the best possible effect to its disappointing results.
The company said it was the first full year of positive operating cash flow since the 737 Max crisis began. Boeing ultimately brought in $3.5 billion more than it spent, and the company reaffirmed its 2023 guidance of positive operating cash flow of between $4.5 billion and $6.5 billion. of dollars.
“Demand in our portfolio is strong and we remain focused on the stability of our operations and supply chain to meet our commitments in 2023 and beyond,” Calhoun said in the company’s statement. “While challenges remain, we are well positioned and on track to restore our operational and financial strength.”
Shares of Boeing (BA) were down 2.5% in morning trading.