Source: AFP
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Boeing shares fell sharply on Thursday after company executives predicted another quarter of slight declines in aircraft deliveries and a likely negative cash balance for all of 2024.
Just after noon New York time, the airline giant's shares were down 5.3%. Chief Financial Officer Brian West said Boeing lost $3.9 billion in cash in the first quarter due to high operating costs and modest income from lower aircraft deliveries, but its second-quarter cash performance was This is because the company said it could be “slightly worse'' than the first quarter.
Boeing had previously expected cash generation to be positive in the low single digits in 2024, but on Thursday West reversed that forecast, suggesting the company's cash generation will likely be negative this year.
West said the company should be cash-flow positive in the second half of 2024 due to rising aircraft deliveries, increased revenue from major military contracts and reduced costs of maintaining aircraft inventories.
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But West said the gains are not expected to be enough to offset losses in the first half of 2024.
Boeing's weak financial outlook is tied to a slowdown in the pace of 737 Max production following a near-catastrophe on an Alaska Airlines jet on Jan. 5.
After panels exploded during flight, Boeing changed manufacturing procedures to emphasize safety, added quality-control checks and temporarily halted production.
Additionally, Boeing recently halted deliveries to China due to lithium battery issues raised by Chinese aviation authorities, West said.
Boeing is working with Chinese authorities but “it is very likely that this will have an impact on deliveries in the quarterly cash flow,” West said.
Boeing is under intense scrutiny from regulators at the Federal Aviation Administration, which requires the company to submit a comprehensive action plan to address safety concerns by the end of May.
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West said Boeing expects “good feedback” from the FAA next week on improvements, including tighter oversight and collaboration with contractor Spirit AeroSystems. He said there was.
Boeing is working on a deal to buy Spirit, which was once part of Boeing until it was spun off in 2005.
Mr. West said he hoped to “close some sort of deal” to buy Spirit Airlines, which also does work for Boeing rival Airbus, in the second quarter.
West said Spirit still needs to address the future of the program for its other customers.
Source: AFP
