Boeing announced Wednesday that it posted a $355 million loss due to lower revenue in the first quarter. It’s another sign of the crisis gripping aircraft manufacturers, which face intense scrutiny over aircraft safety and a growing number of whistleblower accusations of sloppy work.
CEO David Calhoun said the company is going through a “tough time” and is focused on resolving manufacturing issues rather than performance.
Ever since the door plug of a Boeing 737 Max popped off during an Alaska Airlines flight in January, leaving a gaping hole in the plane, company executives have been forced to talk about safety rather than finances.
The accident halted the progress that Boeing seemed to be making during its recovery. two fatal crashes Number of Max jets in 2018 and 2019.
The crashes in Indonesia and Ethiopia are now attracting renewed attention.
Families of some of the 346 people killed in the crash were scheduled to meet with Justice Department officials later Wednesday.
The families unsuccessfully tried to reverse a 2021 settlement between the department and Boeing that allowed the company to avoid criminal prosecution.
“Today, as we report our first quarter financial results, we remain focused on the drastic actions we are taking in response to the Alaska Airlines Flight 1282 incident,” Calhoun told employees in a memo Wednesday. ” he said.
He listed a series of measures the company is taking and reported “significant progress” in improving manufacturing quality. Much of that is due to a slowdown in production, which means fewer planes for airline customers.
Calhoun told CNBC that more rigorous inspections have resulted in an 80% reduction in defects in aircraft from major suppliers. Spirit Aero Systems.
“We certainly face tough times in the near future,” he wrote to employees. “Shortening delivery times can be difficult for customers and financially. But safety and quality must come first.”
Mr. Calhoun, who will retire at the end of this year, reiterated that he has full confidence that the company will recover.
Boeing said its first-quarter loss excluding special items was $1.13 per share, better than the $1.63 per share loss that analysts had expected, according to a FactSet survey.
Sales decreased 7.5% to $16.57 billion.
The company’s stock rose less than 1%.
Boeing stock has fallen by about a third since the Alaska Airlines door plug explosion.
The Federal Aviation Administration has stepped up its oversight and given Boeing until late May to develop a plan to resolve manufacturing issues with the 737 MAX.
Airline customers are frustrated that all the new planes they ordered are not arriving due to shipping disruptions.
Investigators investigating the Alaska flight said the bolt that holds the door plug in place had broken. Missing after repair work At the Boeing factory.
The FBI advised the passengers that they may be victims of a crime.
Several former managers and one current manager reported various problems in the production of Boeing 737 and 787 jetliners.
Most recently, a quality engineer told Congress last week that Boeing was cutting corners in manufacturing that could ultimately cause the 787 Dreamliner to disintegrate.
Boeing aggressively pushed back against his claims.
But Boeing has some advantages.
Boeing, along with Airbus, forms one half of a duopoly that controls the production of large passenger planes.
Both companies have a multi-year backlog of orders from airlines seeking new, more fuel-efficient aircraft.
And Boeing is a major defense contractor for the Department of Defense and governments around the world.
Richard Aboulafia, a longtime industry analyst and consultant at Aerodynamic Advisory, said that despite all the setbacks, Boeing still has a strong combination of products, technology and talent that are in high demand.
“Even if you’re No. 2 and you’re in big trouble, you’re still in a very strong market, and it’s an industry with very high barriers to entry,” he said.
And despite massive losses of about $24 billion over the past five years, Aboulafia said the company is not in danger of going bankrupt.
“This is not General Motors in 2008 or Lockheed in 1971,” Aboulafia said, referring to two iconic companies that required massive government bailouts and loan guarantees to survive.
All of these factors explain why 20 analysts surveyed by FactSet rate Boeing stock a “buy” or “overweight,” while only two rate it a “sell.” useful for. (Five are “pending” ratings.)
