An American Airlines Boeing 737 MAX 8 from Los Angeles approaches to land at Reagan National Airport shortly after the FAA announced the planes were grounded by the United States in Washington, D.C. United States, March 13, 2019.
Joshua Roberts | Reuters
Boeing will spend money this year and deliveries of new planes will not improve in the second quarter compared to the first, as the manufacturer faces a host of production challenges related to its best-selling planes, it said Thursday the company’s chief financial officer, Brian West.
A month ago, West predicted Boeing would generate free cash flow “in the low single-digit billions.” New forecasts show the growing costs of the aircraft manufacturer’s latest crises.
Boeing burned through nearly $4 billion in cash in the first quarter and West said that figure could be similar or “maybe a little worse” in the second quarter, but that the company would likely start generating cash again in the second half. 2024.
The company’s first-quarter aircraft deliveries fell to their lowest level since the pandemic. Most of the price of an aircraft is paid when it is handed over to a customer.
Boeing shares fell 7% in afternoon trading after West’s comments at a Wolfe Research industry conference.
“We have frustrated and disappointed our customers due to some of the production supply chain issues that we are facing,” West said at the conference. “And while I understand this frustration, the most important thing we can do for our customers and the industry supply chain is to focus on the actions underway as we speak so that we can stabilize this production system, improve quality and become more predictable.
Boeing CEO Dave Calhoun announced in March that he would step down by the end of the year, and the company replaced the chairman and CEO of its commercial aircraft division. Before the upheaval, CEOs of major airline customers complained about delivery delays and difficulty scheduling flights due to surprise disruptions.
Boeing’s latest production problems emerged after a door plug exploded in midair from a nearly new 737 Max 9 earlier this year, just as the company was trying to repair years of damage to its reputation following two fatal accidents by Max in 2018 and 2019.
The accident increased federal scrutiny of the company, whose executives pledged to eliminate production defects and regain the trust of regulators, airline customers and the public.
Next Thursday, Boeing executives are expected to meet with the Federal Aviation Administration to outline the company’s plan to improve its quality control, the FAA said. The agency gave Boeing 90 days to complete the plan starting in late February.
Other problems also arose, including a pause in deliveries of 737 Max planes to China to overhaul cockpit voice recorder batteries. Boeing said in a statement that it was working with “our Chinese customers on the timing of their deliveries as the Civil Aviation Administration of China completes its review of the batteries contained in the recorder assembly unit cockpit voice of 25 hours”.
Parts shortages have also slowed deliveries of the 787 Dreamliners, Boeing said. American airlines last month it announced it would cut some international flights due to delays for wide-body aircraft. Other carriers including United Airlines And Southwest Airlinessaid it had to scale back some of its growth and hiring plans due to the delay of Boeing planes.
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