On Wednesday, Boeing reported a loss of $355 million in the first quarter due to a decline in revenue. This further highlights the critical situation the aircraft maker is currently facing as it deals with mounting concerns about the safety of its planes and allegations of poor workmanship from an increasing number of whistleblowers.
Boeing Posts A $355 Million Loss As The Plane Maker Tries To Dig Out From Under Its Latest Crisis
CEO David Calhoun acknowledged that the company is currently facing a challenging period and is primarily dedicated to resolving its manufacturing problems rather than focusing on financial outcomes.
Following an incident in which a door plug blew out of a Boeing 737 Max during an Alaska Airlines flight in January, resulting in significant damage to the jet, company management has been compelled to prioritize safety discussions over financial matters.
The tragedy impeded the progress that Boeing appeared to be making in its recovery from two fatal disasters involving Max jets in 2018 and 2019.
The recent aviation accidents in Indonesia and Ethiopia have attracted significant attention. Later on Wednesday, the relatives of some of the 346 individuals who lost their lives in the accidents were slated to have a meeting with officials from the U.S. Justice Department. Relatives have made fruitless attempts to reverse a deal reached in 2021 between the department and Boeing, which allowed the firm to evade criminal charges.
“Despite the fact that we are announcing our financial results for the first quarter today, our main priority is still on the extensive measures we are implementing in response to the Alaska Airlines Flight 1282 accident,” Calhoun informed employees in a memo on Wednesday.
The individual enumerated a sequence of measures that the corporation is implementing and said that there has been “substantial advancement” in enhancing manufacturing quality, mostly achieved by reducing the pace of production, resulting in a reduced number of aircraft for its airline clients. According to Calhoun’s statement to CNBC, doing more thorough inspections has led to a significant reduction of 80% in the defects found in the fuselages produced by the main supplier, Spirit AeroSystems.
“In the immediate future, we are indeed facing a challenging period,” he wrote to the employees. Reduced deliveries pose challenges for both our customers and our financial performance. However, prioritizing safety and quality is essential and will always precede everything else.
Calhoun, who will resign after the year, reiterated his complete confidence in the company’s ability to rebound.
According to a FactSet survey, Boeing reported a first-quarter loss of $1.13 per share, excluding exceptional items. This was an improvement compared to analysts’ forecasted loss of $1.63 per share.
The revenue declined by 7.5%, amounting to $16.57 billion.
The company’s stock had a 3% increase shortly after the commencement of morning trade.
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Boeing Posts A $355 Million Loss As The Plane Maker Tries To Dig Out From Under Its Latest Crisis
The value of Boeing stock has decreased by around 33% following the incident involving the door-plug blowout on an Alaska Airlines aircraft. The Federal Aviation Administration has intensified its supervision and granted Boeing an extended deadline until late May to formulate a strategy to rectify issues in producing 737 Max aircraft. The airline’s customers are dissatisfied with the failure to receive all the newly ordered aircraft due to disruptions in delivery.
Investigators examining the Alaska aircraft have determined that the bolts responsible for securing the door stopper were absent following maintenance performed at a Boeing facility. The FBI informed passengers that they could potentially be victims of criminal activity.
Multiple ex-managers and one present manager have documented various issues in producing Boeing 737 and 787 aircraft. Last week, during a Congressional hearing, a quality engineer stated that Boeing is engaging in manufacturing practices that may lead to structural failures in the 787 Dreamliners. Boeing vehemently contested his assertions.
Nevertheless, Boeing possesses a few advantages.
Boeing and Airbus constitute a duopoly that holds a dominant position in the production of large commercial aircraft. Both corporations possess significant backlogs of orders from airlines eagerly seeking new, more fuel-efficient aircraft. Boeing is a prominent defense contractor for the Pentagon and several nations globally.
Richard Aboulafia, an experienced industry analyst and consultant at AeroDynamic Advisory, stated that despite the numerous obstacles, Boeing has a formidable combination of sought-after products, advanced technology, and skilled personnel.
Boeing Posts A $355 Million Loss As The Plane Maker Tries To Dig Out From Under Its Latest Crisis
“Despite being ranked second and facing significant challenges, they still operate in a robust market and an industry with formidable barriers to entry,” he stated.
Despite incurring substantial losses of over $24 billion over the past five years, the corporation is safe from collapsing, according to Aboulafia.
“This situation is not comparable to General Motors in 2008 or Lockheed in 1971,” Aboulafia remarked, alluding to two renowned companies that required substantial government bailouts or loan guarantees to stay afloat.
The considerations above contribute to the rationale behind the positive assessments of Boeing shares by 20 analysts in a FactSet survey, who have rated them as “Buy” or “Overweight”. In contrast, only two analysts have assigned “Sell” ratings. (Five of them have “Hold” ratings.)
SOURCE – (AP)
