Boeing burned through $3.9 billion in cash in Q1 amid a bruising start to the year that has included federal probes into its manufacturing and damning claims regarding its quality control.
Boeing’s commercial airplane business revenue hit $4.7 billion in Q1, a 31% year-over-year drop. The company also had a net loss of $355 million, up 16.5% from a year ago.
The aircraft maker's Q1 revenue fell 8% year over year, down to $16.6 billion.
Executives blamed much of the company's performance on slowdowns in production output as it addresses quality concerns and cooperates with a Federal Aviation Administration probe.
“While near-term delivery shortfalls hurt and will affect our performance during our first half of the year, the long-term benefits from a synchronized supply chain will be substantial,” Boeing CEO and President Dave Calhoun told analysts on Wednesday.
The company has slowed production of its 737 Max units to less than 38 a month to integrate quality improvements into its manufacturing processes, CFO and EVP of Finance Brian West said on the call.
The aircraft maker intends to keep the reduced operational level throughout the first half of the year, West said. Production numbers are expected to go up in the second half of 2024 back to 38 units per month and possibly higher, depending on Boeing's work with the FAA.
Boeing’s commercial aircraft deliveries saw a drastic drop at the start of the year, producing just 83 aircraft in Q1, compared to 130 planes a year ago.
“We are absolutely committed to doing everything that we can to make certain our regulators, our customers and most importantly, our employees and the flying public are 100% confident in Boeing," Calhoun said on the call.
Stabilizing production a top priority
In the meantime, the focus will be on stability at Spirit AeroSystems' plant in Wichita, Kansas, and Boeing’s factory in Renton, Washington, West said.
The aircraft maker has increased its presence at Spirit AeroSystems' facility by moving inspection and rework teams at the site, which began on March 1, Calhoun said. Since then, Boeing has allowed only fully inspected fuselages to be shipped to its Renton plant.
“The visibility in Wichita will help the Spirit team prevent nonconformances from being created in the first place,” Calhoun said. “We are already beginning to see signs of more predictable and reduced cycle times in our factory, as a result of these enhanced quality control standards.”
Boeing has also advanced Spirit AeroSystems $425 million to support factory operations, most of which West said will be repaid in Q3. The money will help Spirit AeroSystems maintain production readiness as outputs remain slow, as well as factory costs associated with “product quality verification process enhancements,” according to a Securities and Exchange Commission filing.
Spirit AeroSystems talks continue
Boeing remains in discussions with Spirit AeroSystems about a possible acquisition, West said on the call. The deal has become more complex as Airbus, Spirit AeroSystems’ other major customer, is now also involved in the discussions, Reuters reported earlier this month.
"This is a deal where discussions are ongoing. It's complicated. There's other parties involved," the CFO said.
The two aircraft makers are in talks to split their supplier’s operations based on each of their needs.
“As with any large and complex deal, there are a number of terms and issues we need to work through, including price, financing and other key items,” West said. “We believe in the strategic logic of a deal, but we'll take the time needed to get this right before we decide to enter into [an] agreement.”
