Boeing shares tanked after the company reported a net loss of $1.2 billion during the quarter, compared to $561 million during the same period a year ago, as CEO Dave Calhoun addressed some major headwinds.
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In a letter accompanying first quarter earnings results, Calhoun acknowledged the loss of the 123 passengers and nine crew members who were killed after China Eastern Airlines flight MU 5735 crashed into a hillside in Southern China.
"Our thoughts and prayers remain with the family members and loved ones of the passengers and crew, and everyone who has been affected by this accident," Calhoun wrote. "We will continue to support our airline customer and a Boeing technical team continues to support the National Transportation Safety Board and the Civil Aviation Administration of China, who is leading the investigation."
Officials with the Civil Aviation Administration of China (CAAC) found no evidence of systematic failure aboard the Boeing 737-800 jet at the time of the crash.
The investigation ruled out a number of environmental and circumstantial factors as possible complications that could have led to the crash, namely claiming that the crew was qualified, the jet properly maintained, the weather fine, and no dangerous packages or luggage was on board at the time.
The plane's two black boxes were "severely damaged" and have been sent to the National Transportation Safety Board for a thorough analysis.
The ongoing investigation of the China crash comes as the Boeing 737 Max is officially approved to fly in every country after being grounded following two fatal crashes in 2018 and 2019. Since late 2020, Boeing's 737 Max fleet has safely flown more than one million flight hours with schedule reliability above 99%.
In the first quarter, Boeing delivered 81 737 Max airplanes, including 34 in March, and steadily increased production of the airplane. The company booked 167 gross commercial airplane orders during the quarter, including 134 for the 737 Max, and is on track to reach a production rate of 31 737 Max jets per month in the second quarter.
"We’ll continue to prioritize quality, stability and supply chain capacity in determining future production increases," Calhoun said.
Meanwhile, Boeing has submitted a certification plan to the Federal Aviation Administration for its 787 Dreamliner as deliveries of the plane remain halted for a previously identified structural flaw. Calhoun said required work on the initial airplanes has been completed and that check flights are underway.
The company, which is currently producing the 787s at a "very low" rate, anticipates deliveries of the plane will gradually return to five per month over time. Boeing expects to incur abnormal costs of approximately $2 billion, with most being incurred by the end of 2023.
Delivery of Boeing's first 777-9 airplane has also been delayed until 2025 due to a certification delay. To minimize inventory, 777-9 production is being temporarily paused through 2023, which will result in approximately $1.5 billion in abnormal costs beginning in the second quarter and continuing until production resumes. The adjustment will enable Boeing to add 777 freighter capacity starting in late 2023.
"We remain confident in the 777 program and our customers continue to see the value in its compelling economics and sustainability benefits," Calhoun added.
Boeing's total revenue came in at $13.99 billion, compared to $15.2 billion during the same period a year ago. The company posted a $212 million pretax charge tied to the Russia-Ukraine war.
The Commercial Airplanes segment generated revenue of $3.2 billion after delivering a total of 95 airplanes during the quarter. Boeing has a backlog of nearly 4,200 commercial airplanes valued at $291 billion.
Defense, space and security revenue fell to $5.5 billion due to lower volume, a $600 million charge on its VC-25B program and a $367 million charge on its T-7A Red Hawk program. The segment's backlog is valued at $60 billion, with customers outside the U.S. accounting for 33% of orders.
Global services revenue increased to $4.3 billion, or roughly 90% of pre-pandemic levels. Global services orders were valued at $3 billion during the quarter, while its backlog is valued at $20 billion.
Despite the pressures on Boeing's defense and commercial development programs, the company remains on track to generate positive cash flow for 2022.
FOX Business' Peter Aiken contributed to this report