Boeing 'burns' more money than expected due to a series of incidents

Boeing Chief Financial Officer Brian West estimates the current safety crisis will cost them billions of dollars in the first quarter.

At a Bank of America conference on March 20, West said Boeing is working to control safety issues with the 737 aircraft. He forecast that in the first quarter, Boeing could lose $4 billion to $4.5 billion in cash, higher than expected in January.

US authorities currently allow Boeing to produce only 39 737s a month. However, West said Boeing's actual production is lower than that. "We are proactively slowing down to make sure everything is in place. The impact will be felt in the next few months," he said at a conference yesterday.

The production cuts and delivery delays are hitting Boeing’s free cash flow, meaning it will take longer to reach its 2022 financial target. That would be 2025 or 2026 at the latest, with cash flow of around $10 billion.

“It will definitely take time. But we think what we are doing now will be beneficial in the long term,” he explained.

A Boeing 737 Max at the Farnborough Air Show (UK) in 2022. Photo: Reuters — A Boeing 737 Max at the Farnborough Air Show (UK) in 2022. Photo: *Reuters*

West said its commercial aircraft margins could be “negative 20%” in the first quarter due to compensation for late deliveries to customers. That figure will improve this year, but overall 2024 will still be negative.

Boeing shares fell 2.3% on March 20. The stock has lost 25% since the beginning of the year.

Boeing is under mounting pressure after a series of quality and safety issues. On January 5, an Alaska Airlines 737 MAX 9 made an emergency landing after a door seal came loose at 16,000 feet. Three days later, United Airlines discovered loose screws on several 737 MAX 9s during a preliminary inspection.

The US Federal Aviation Administration (FAA) has grounded 171 737 MAX 9s in the US for inspection and maintenance. In late January, Alaska Airlines announced that an inspection following a door seal failure found loose screws on several 737 MAX 9s. United Airlines canceled 200 flights using the aircraft.

The incident has left Boeing in the crosshairs of US authorities and angered airlines, who have had to cut routes and buy more planes to meet demand. Michael O'Leary, CEO of Ryanair (one of Boeing's key customers), said on Reuters that he would meet with company executives this week to discuss the issue.

Ha Thu (according to Reuters)

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