Boeing has halted production of its flagship 777X with deliveries delayed till 2025 as it reports first-quarter revenue of $14.0 billion, driven by lower defence volume and charges on fixed-price defence development programs, partially offset by commercial services volume.
The company recorded a net loss of $1.21 billion and an operating cash flow of ($3.2) billion.
“While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” said Dave Calhoun, Boeing’s president and chief executive officer.
“We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA. Despite the pressures on our defence and commercial development programs, we remain on track to generate positive cash flow for 2022, and we’re focused on our performance as we work through certification requirements and mature several key programs to production. Leading with safety and quality, we’re taking the right actions to drive stability throughout our operations, deliver on our commitments to customers and position Boeing for a sustainable future.”
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Commercial Airplanes first-quarter revenue of $4.2 billion decreased slightly, primarily due to the timing of wide-body deliveries, partially offset by higher 737 deliveries.
The operating margin of (20.6)% also reflects abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expenses.
Boeing said it has nearly completed the global safe return to service of the 737 MAX and the fleet has flown more than one million total flight hours since late 2020. The 737 production rate continues to increase and is expected to increase to 31 airplanes per month during the second quarter the company said.
On the 787, the company said it has submitted the certification plan to the FAA. Rework has been completed on the initial airplanes and the company said it continues to work closely with the FAA on the timing of resuming deliveries.
Boeing said that the program is producing at a very low rate and will continue to do so until deliveries resume, with an expected gradual return to five per month over time. The company continues to anticipate 787 abnormal costs of approximately $2 billion, with most being incurred by the end of 2023, including $312 million recorded in the quarter.
During the quarter, the company launched the 777-8 Freighter with an order from Qatar Airways. Delivery of the first 777-9 airplane is now expected in 2025 Boeing said, which reflects an updated assessment of the time required to meet certification requirements.
It adds that to minimize inventory and the number of airplanes requiring change incorporation, the 777-9 production rate ramp is being adjusted, including a temporary pause through 2023.
Boeing said that this will result in approximately $1.5 billion of abnormal costs beginning in the second quarter of this year and continuing until 777-9 production resumes.
Commercial Airplanes delivered 95 airplanes during the quarter and the backlog included nearly 4,200 airplanes valued at $291 billion.
