Boeing focuses on quality before discussing new financial targets

(New York) Before thinking about its financial objectives, the American aircraft manufacturer Boeing will take a “pause” for the time necessary to improve the quality of its planes, after an incident in early January on an Alaska Airlines flight and a series of production problems in 2023.

“We are going to take a break for as long as we need to take a break,” Dave Calhoun, boss of Boeing, said on CNBC on Wednesday.

The manager was questioned about the group’s pre-existing prospects for 2025/2026 which were neither confirmed nor canceled on Wednesday during the publication of the company’s 2023 results.

“No one needs additional pressure at this time,” he clarified, indicating that the group would discuss its objectives “when the time is appropriate”.

Boeing was particularly counting on ten billion dollars per year in cash flow in 2025-2026, based on a higher production rate.

But this could be thwarted by the decision on January 24 of the American civil aviation regulatory agency (FAA) which prohibits it from any expansion of the production of its flagship plane, the 737.

This decision follows the incident on January 5, when a cabin door of an Alaska Airlines Boeing 737 MAX 9 flying from Portland, Oregon to Ontario, California came loose in flight.

The 171 aircraft with this configuration, out of the 218 Boeing 737 MAX 9 delivered to date, have been grounded by the FAA. On January 24, it published a “vast” maintenance and inspection program which allowed these devices to be gradually returned to service.

Alaska Airlines was the first, with a flight Friday afternoon.

Idle cadence

Boeing suffered a series of quality and supply chain issues during 2023, which slowed its production rate for several months and, consequently, the number of its deliveries.

The group nevertheless managed to achieve its production rate objectives at the end of 2023: five 787 aircraft and 38 737 aircraft per month (compared to 31 at the start of the year). But it is targeting monthly production of fifty aircraft from the 737 family by 2025/2026.

In a message addressed to the group’s employees and sent to the press, Dave Calhoun affirmed that he remained focused on “the actions” carried out “as a company to strengthen quality at Boeing”.

“We will go slowly, we will not rush the system and we will take our time to do things correctly,” he noted.

The group unveiled results above expectations for the fourth quarter of 2023 on Wednesday.

Over this period, it generated a turnover of $22.02 billion and recorded a net loss of $23 million. The FactSet consensus expected 21.18 billion and a loss of 188 million respectively.

Reported per share and excluding exceptional items – a benchmark for the markets – the net loss stood at 47 cents, less than analysts’ expectations (loss of 78 cents).

For the entire 2023 financial year, turnover reached $77.79 billion and net loss $2.24 billion. This is its fifth consecutive year in the red.

The aircraft manufacturer delivered 157 commercial aircraft between October and December and received net orders for 611 aircraft.

When presenting its quarterly results at the end of October, it resolved to lower its forecast for annual deliveries of the 737, to count on 375 to 400 units delivered in 2023, instead of the 400 to 450 previously expected. In the end, he delivered 396.

“We often use this time of year to share or update our financial and operational goals, but now is not the time,” Calhoun noted in his letter to employees.

“We have a significant challenge ahead of us,” he added. But “we have every confidence in our recovery,” he assured.

Around 10:10 a.m. (Eastern time), Boeing stock was up 3% on the New York Stock Exchange.


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