Boeing posts $ 4 billion loss linked to problems with the 787 Jet | Economic news
By DAVID KOENIG, AP Airlines Editor
Boeing reported a fourth-quarter loss of $4.16 billion on Wednesday as the financial fallout from production defects in one of its best-selling planes, the 787 Dreamliner, worsened.
The aircraft manufacturer has paid $3.5 billion to cover further delays in delivering copies of its 787 jetliner and compensation for airlines still waiting to receive their planes.
The company said 787 manufacturing issues would add $2 billion in unusual production costs, double an earlier projection.
Boeing has just completed a year in which aircraft sales rebounded from a recession caused by the grounding of its 737 Max jetliner and a pandemic that crippled air travel. The Chicago-based company again finished far behind European rival Airbus in delivering new planes last year, partly because of the 787.
The twin-aisle 787 was grounded for more than three months in 2013 by overheating lithium-ion batteries. After design changes, the plane became a hit with airlines, who liked its fuel economy on long flights, and travelers, who liked the larger windows and more comfortable cabin.
However, Boeing halted deliveries at the end of 2020 due to production flaws, including gaps where the carbon composite fuselage panels are joined. Shortly after resuming deliveries, Boeing halted them again in May 2021 as other issues surfaced, including faulty titanium parts from a supplier, and the company has so far not been able to obtain Federal Aviation Administration approval for its fixes.
“The redesign process is going well — it’s long, it’s disciplined, but it’s going well,” CEO David Calhoun told CNBC. “Our mechanics learn a ton in the process.”
Boeing’s inability to resume deliveries is causing headaches for airline customers.
Without the 787s it expected to receive now, American Airlines has dropped some international flights scheduled for next summer. US officials say Boeing has agreed to pay penalties for missed deadlines, and they say there could be negotiations over additional compensation if the delays last much longer.
A senior United Airlines official said this month that the carrier does not expect to get new 787s until this summer, and will reduce flights accordingly. The planes were due to be delivered in the first half of last year.
The 787 saga unfolds just as Boeing is trying to surpass the grim first record of the 737 Max, which was grounded around the world for nearly two years after two crashes that killed 346 people in all. Following an FAA-approved redesign, Boeing delivered 245 Max jets last year, providing much-needed cash.
Separately, Boeing wrote off $402 million for a tanker it manufactures for the US Air Force. The accusation resulted in a loss for Boeing’s usually dependable defense and space business.
Edward Jones analyst Jeff Windau said the scale of Boeing’s writedowns came as a surprise and the company needed to do something to boost business with China, which only recently allowed the 737 Max to resume its flights. flights. But Boeing generated positive cash flow for the first time since early 2019, and sales are up.
“They’ve done a good job of bouncing back to where they were on the controls, and I think that sets them up nicely from a long-term perspective,” he said.
Boeing’s loss in the fourth quarter compared to an $8.44 billion loss in the same period a year earlier, when airlines had little appetite for new planes.
Excluding one-time charges, Boeing would have lost $7.69 per share — far worse than Wall Street expectations for a loss of 36 cents per share, according to a FactSet survey.
Revenue was $14.16 billion, down 3% from a year ago, also below analyst forecasts of $16.54 billion.
CEO Calhoun called 2021 a year of rebuilding and said in a note to staff that Boeing is “well positioned to accelerate our progress in 2022 and beyond.” He said the airline industry’s recovery from the pandemic has boosted demand for new planes, and he expressed optimism about the 787’s long-term prospects.
Boeing shares fell nearly 5% in Wednesday afternoon trading.
David Koenig can be contacted at www.twitter.com/airlinewriter
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