Boeing reports $355 million loss amid door blowout crisis
Boeing lost $355 million in the first quarter as it struggled with the fallout from a January door blowout on a 737 Max 9.
According to quarterly results posted Wednesday, the aerospace giant’s revenue declined 8 percent year-over-year to $16.6 billion. That was actually a better result than expected by analysts, who had predicted a larger loss and revenue of $16.2 billion, according to CNBC. Boeing stock was up 3.5 percent shortly after trading began.
Executives said the financial losses reflect a broad production slowdown as the company changes the way it makes airplanes.
“Near term, yes, we are in a tough moment,” Boeing chief executive Dave Calhoun said in a letter to employees. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else.”
It’s the seventh consecutive quarterly loss for the embattled jet maker.
The Jan. 5 blowout on an Alaska Airlines flight has led to a broader reckoning for Boeing, which only five years prior had dealt with the worldwide grounding of its signature 737 Max over flight control problems involved in two deadly plane crashes.
In recent months the Federal Aviation Administration has repeatedly found lapses in Boeing’s production quality. Boeing’s chief of commercial airlines, Stan Deal, stepped down. Calhoun plans to leave by the end of the year.
Federal regulators barred the company from increasing its output, and it slowed its production of 737 Max jets to work on quality control. As a result, Boeing delivered fewer completed airplanes - 83 in the first quarter, down 36 percent year-over-year.
Calhoun warned employees that production will slow even further as the company works on quality control.
“We are using this period, as difficult as it is, to deliberately slow the system, stabilize the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term,” Calhoun said in the letter.
Boeing expects production to return to its “normal order” in the second half of the year, Calhoun told CNBC on Wednesday. Ultimately, Boeing still expects to hit the long-term cash flow targets it had before its current spate of problems, he said.
Boeing’s production problems have spilled over into the airline sector. United Airlines reported that the emergency grounding of the Max 9 cost it $200 million in the first quarter. Southwest said it has received fewer Boeing deliveries than expected, something that could require it to reduce the number of seats it offers and rethink its spending.
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