Boeing shares dropped 10 per cent to an 18-month low after executives admitted struggling to accelerate production of flagship jet models, forcing a lower full-year delivery target. Chief executive Kelly Ortberg told investors on Tuesday that the aerospace group’s attempt to increase production of its narrow-body 737 jets to 47 a month was falling behind schedule, hurting hopes of a sharp rise in profits over the next year.
“It is taking longer than we had expected to demonstrate performance at rate 47,” Ortberg said. “We’re making progress, but we still have more work to do, and I’m expecting it’ll take us into next year to get fully stable at this rate.” Boeing will now deliver fewer than the 500 737s it had targeted by the end of this year. The company also expects to deliver closer to 90 of its 787 wide-body jets, at the lower end of its guidance.
The update came after Boeing posted a third-quarter net loss of $116mn, significantly lower than the $5.34bn loss of a year earlier. Group revenues rose nearly 4 per cent to $24.19bn, driven in part by higher sales from its defence, space and security business. Free cash flow beat expectations at $464mn but long-term free cash guidance was tightened to $2bn this year, $3bn next year, then $6bn in 2028 and $10bn in 2029.
Raising jet production remains a priority for Boeing and a key plank in Ortberg’s turnaround efforts after years of safety and quality issues. Analyst Robert Stallard at Vertical Research Partners called the revised guidance “painful” but “arguably the right step as it sets a realistic base and provides better clarity.”
Source: Financial Times Companies · Summarized by HeadlinesBriefing