Boeing predicts massive money loss due to incident of its 737 Max aircraft model

Boeing Co has forecast a steep cash decline for the first quarter as regulatory scrutiny following a plane incident in January and slowed production of its 737 Max plane weigh on its finances.

Financial director of said that cash outflow in the first quarter will reach 4 billion to 4.5 billion boeing, brian westat a conference of Bank of America In london, For the full year, free cash flow will be in the low single-digit billions of dollars, West said. Analysts were expecting $5 billion, according to data compiled by bloomberg,

This perspective reflects a change in priorities boeing While dealing with the consequences of a near-catastrophic failure of the aircraft’s fuselage 737 max 9 airplane Earlier this year. The company has slowed aircraft deliveries while it is using resources to eliminate so-called commuter labor from all of its commercial product lines, West said.

The installation of out-of-order parts has led to a decrease in quality, which has prompted US regulators to carefully review its manufacturing.

“We’re not at a point where we can handle these financial results short-term as work continues around sustainability,” West said. “Our hope is that we will become more predictable and better positioned, but that will take time,” he said.

West expects margins for airliner business boeing To be negative by almost 20% in the first quarter, the worst performance since the end of 2021. Although losses should improve in the coming months, margins are expected to remain negative through 2024, he said.

Regulators have limited its production 737maxbiggest source of cash boeingUntil they are satisfied that the company has firm control over the quality of work in its production system.

The CFO said the production rate will be low in the first half and then increase to 38 units in the second half of the year. 737max One month. Anything beyond that “will be up to the FAA,” West said, referring to Federal Aviation Administration,

Starting March 1, boeing stopped accepting chassis Spirit AeroSystems Holdings Inc. The manager highlighted that they were lacking parts or needed repairs. Although this should reduce the workload for the company’s mechanics, in the short term “there may be variability in supply,” he said.

Shares of the aircraft maker rose 0.5% at 9:56 a.m. local time. The company is scheduled to report first-quarter earnings in late April.

A few weeks after the January incident, boeing refrained from providing its usual annual target for delivery of 737max As it worked to perfect its processes and subject its production standards to more and more intense public scrutiny.

The company’s downturn is already being felt among jet-hungry airlines as they compete for new jets. Executive Director of Ryanair Holdings PLC, Michael O’LearyIt said at a separate conference in Brussels on Wednesday that summer capacity in Europe would be limited due to delivery delays. boeing and separate engine problems affecting airliners. airbus se,

The Irish low-cost carrier flies an entire Boeing fleet and has been forced to reduce some targets and destinations for this summer because it is not getting as many planes as it had planned. o’leary He said he would meet officials from the US aircraft manufacturer later on Wednesday.

Investors’ hopes have been dashed in what was supposed to be a crucial year for the manufacturer’s recovery from half a decade of turmoil.

cash balance of boeing It told clients it could reach $8 billion by the end of the first quarter after paying off some debt at the beginning of the year. seth sefmananalyst JP Morgan, The company ended 2023 with about $16 billion in cash and short-term securities.

Despite setbacks, aircraft maker has enough reserves to pay for potential acquisitions spirit aero into cash and debt rather than issuing stock, West said. If done, the deal would reverse the larger outsourcing movement. boeing After nearly 20 years, the aerospace giant was allowed tighter control over its largest parts supplier.

administrator of FAA, michael whittakersaid to nbcnews On Tuesday he left from a recent visit to the industrial base boeing There were concerns in the Seattle area that the emphasis on increasing production rates had destroyed the company’s safety culture.

In view of the uncertainty regarding the actions of FAA About that 737 maxanalyst robert stallard Vertical Research Partners suggested this boeing Its pre-crisis goal of generating $10 billion in cash by 2025 or 2026 should be abandoned until it makes more progress in addressing its problems.

West reaffirmed the target on Wednesday, while acknowledging that improvements would not come until later in the period. Stallard tells his clients, “The first step to fixing a problem is recognizing that it exists.” They concluded, “Boeing’s cut to its free cash flow guidance is a belated recognition of the situation in which it finds itself, but we are still concerned that it is overly optimistic.”

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