Boeing Reports $5.4 Billion Loss in Third Quarter as 777X Certification Delays Take Toll

Strategic Insights -

Boeing's third-quarter results were overshadowed by a $4.9 billion charge related to the delayed certification of its 777X aircraft, despite a 30% year-on-year rise in revenue to $23.3 billion. The company's chief executive, Kelly Ortberg, acknowledged the challenges in rebuilding operations and reputation after multiple safety lapses, including the fatal 737 MAX crashes in 2018 and 2019.

Key Takeaways:

  • Boeing reported a $5.4 billion loss for the third quarter due to a $4.9 billion charge related to the delayed certification of the 777X aircraft.
  • The company posted a 30% year-on-year rise in revenue to $23.3 billion, driven by higher commercial jet deliveries.
  • Chief Executive Kelly Ortberg pointed to the Federal Aviation Administration's (FAA) approval for a higher monthly production rate of the 737 MAX as a sign of progress.
  • Boeing generated positive free cash flow during the quarter, a metric closely tracked by Wall Street.
  • The company has pushed back the commercial launch of the 777X to 2027 from its earlier 2026 timeline.
  • In 2020, Boeing booked a $6.5 billion charge on the same programme amid the protracted certification process and weak airline demand during the Covid-19 pandemic.
  • The ongoing US government shutdown has had a "minor" impact on the company, according to Ortberg.
  • Boeing's defense operations in St. Louis are "effectively executing" contingency plans after more than 3,000 workers rejected the company's latest contract offer.

Statistics:

  • Boeing reported a $5.4 billion loss for the third quarter.
  • The company posted a 30% year-on-year rise in revenue to $23.3 billion.
  • Charges related to the 777X program have now totalled $11 billion ($6.5 billion in 2020 and $4.9 billion in the third quarter).
  • Boeing generated $1.4 billion in positive free cash flow during the quarter.
  • Over 3,000 workers in St. Louis rejected Boeing's latest contract offer.

Sources:

  • CNBC, interview with Kelly Ortberg on CNBC
  • Boeing's Q3 2023 earnings report
  • Federal Aviation Administration (FAA), statement on 737 MAX production rate increase
  • Times of India, article on Boeing's Q3 results