Boeing managed to reduce its losses at the end of last year, but its CEO emphasized that now is “not the time” to set financial targets as the company deals with the aftermath of a fuselage panel that blew out midflight on one of its new 737 Max 9 aircraft earlier this month.
CEO Dave Calhoun, who has led the aerospace giant for four years following two fatal crashes involving the Max, is facing renewed pressure to restore the company’s reputation among airline customers, regulators, and the public after the incident on January 5, when a panel blew out on Alaska Airlines Flight 1282 while the aircraft was ascending from Portland, Oregon, resulting in a significant hole in the side of the plane.
Calhoun praised Alaska Airlines for grounding its Max 9 fleet after the incident. Subsequently, the Federal Aviation Administration (FAA) also grounded the aircraft.
“Alaska Airlines did exactly what we would hope any airline would do in a moment like that, and that’s why the airline industry is as safe as it is,” Calhoun stated during an earnings call on Wednesday. “We caused the problem, and we recognize that.”
Federal investigators are looking into whether the door plug was improperly installed before the Max 9 was handed over to Alaska late last year.
The National Transportation Safety Board is anticipated to release a preliminary report regarding the accident in the coming days.
The incident involving Alaska 1282 marks the most severe in a series of apparent production issues, which have hindered new aircraft deliveries and frustrated some of Boeing’s largest airline customers, while its main competitor, Airbus, continues to outperform Boeing in aircraft deliveries.
“While we often use this time of year to share or update our financial and operational objectives, now is not the appropriate time for that,” Calhoun said in a message to employees on Wednesday.
“Our focus will be on the next aircraft and on doing everything possible to support our customers, follow our regulator’s guidance, and ensure the highest standards of safety and quality in all our operations. Ultimately, that focus will drive our performance.”
Boeing reaffirmed its financial goals for 2025 and 2026, which were outlined during a 2022 investor day, aiming for approximately $10 billion in free cash flow and $100 billion in revenue as early as next year.
“We remain confident in the goals we set for ’25 and ’26, although it may take longer than initially anticipated, and we will not rush the process,” Chief Financial Officer Brian West said on an earnings call on Wednesday.
In the previous year, Boeing delivered 528 airplanes to customers, an increase from 480 in 2022. This total includes the Max, 787 Dreamliners, and other models. Boeing had previously stated a target of around 800 annual deliveries either next year or in 2026.
Last week, the FAA authorized the Max 9 to resume flying but stated it would pause Boeing’s planned increase in production, which the company intended to elevate to around 50 Max planes per month in 2025 or 2026. Boeing confirmed on Wednesday that it is currently producing 38 Max aircraft monthly.
The Boeing 737 Max is the company’s top-selling aircraft. A delay in production increases could jeopardize Boeing’s financial objectives and impact suppliers that have been gearing up for higher production, as well as customers who are counting on new aircraft to meet post-Covid travel demand.
In the weeks following the incident, Calhoun has visited company and supplier production lines, as well as lawmakers on Capitol Hill, pledging transparency and committing to address any shortcomings in manufacturing.
The company conducted its first of several production stand-downs last week to discuss manufacturing issues and potential enhancements to Boeing’s processes.
“Our factory floor employees understand better than anyone what we need to do to improve.
We should actively seek their input, comprehend how to assist, and consistently encourage any team member who identifies issues that need to be addressed,” Calhoun remarked in his note to employees on Wednesday.
“We will take our time, not rush the process, and ensure we execute it correctly.”
Boeing executives are also facing inquiries about how the recent accident and increased scrutiny from the FAA may influence the certification timelines for the Max 7 and Max 10, the smallest and largest models in the company’s best-selling series.
On Monday, following pressure from lawmakers, Boeing announced that it would not seek a safety exemption for the Max 7 concerning a de-icing system but would instead pursue an engineering solution.
Boeing recorded a net loss of $30 million, or 4 cents per share, in the fourth quarter, a reduction from a $663 million loss, or $1.06 per share, the previous year. After adjusting for one-time items, Boeing reported a net loss of 47 cents per share.
The company’s free cash flow of $2.95 billion for the quarter exceeded analysts’ expectations, and revenue increased by 10% year over year to reach $22.02 billion.
