Boeing The US said on Wednesday it incurred $4.5 billion in fourth-quarter charges for delays to its 787 program, clouding the U.S. planemaker’s long-awaited return to positive cash flow fueled by rebounding deliveries of the 737 MAX.
Shares of the company fell 0.3% in pre-market trading as the planemaker suffered heavy losses due to the 787 charge after two quarters of profit.
Mixed quarterly results underscore challenges facing Boeing as he seeks to recover from coronavirus pandemic and the 737 MAX safety crises, while also navigating difficulties from the industrial sector and the regulatory arena on its larger 787 and 777X flagships.
Reuters reported last week that 787 deliveries are expected to remain frozen for months as U.S. regulators review repairs and inspections for structural flaws on the planes, while designs for the new 777X face further regulatory pushback from Europe.
“While we never want to disappoint our customers or lose expectations, the work we are doing now will create stability and predictability in the future,” said the Boeing CEO Dave Calhoun, to employees in a memo seen by Reuters.
Calhoun stopped short of saying when 787 deliveries would resume. The program remains at a “very low” production rate, with an expected gradual return to five per month over time, Boeing said.
Boeing revealed a $3.5 billion pre-tax non-cash charge related to delays in 787 deliveries and customer concessions, and another $1 billion in extraordinary production costs.
Boeing had previously forecast that the 787’s slow production rates and redesign would result in about $1 billion in extraordinary costs.
The company reported a core operating loss of $4.54 billion in the fourth quarter ended December 31, compared with a loss of $8.38 billion a year earlier, when the company booked a $6.5 billion charge due to delays. in its 777X aircraft program.
Even so, Boeing generated positive cash flow in the fourth quarter, representing its first period of positive cash since the beginning of 2019, driven by deliveries of 737 MAX as air travel recovers from the pandemic.
The firm reported expenses of $3.8 billion in the fourth quarter for 787 assembly costs.
Meanwhile, the group recorded a net loss of 4.1 billion dollars in that period, while the red balance for all of 2021 was 4.2 billion dollars.
Boeing, which was counting on the gradual return to activity of the 737 MAX model after the two fatal accidents that had left it grounded for more than 20 months, was surprised this time by manufacturing defects.
The defects were discovered in the late summer of 2020, in the connection of a part of the fuselage and in the horizontal stabilizer. Other technical problems then appeared, notably in the nose of the aircraft.
Initially, Boeing had to suspend deliveries from November 2020 to March 2021, then from the end of May, and also reduce production runs.
(With information from AFP)