Boeing production troubles continued in the last quarter, with the aerospace giant continuing to lose money, but the company’s management is confident that things are on the mend, writes eToro analyst Bogdan Maioreanu.
The airplane manufacturer and defense contractor missed its targets on both revenue and profitability but reaffirmed guidance, vowing to reach its free cash flow target for the year. At global level, in 2022 there were 28.385 commercial airplanes in operation out of which 47.5% or almost 13.500 were Boeing.
For the third quarter, Boeing reported top-line revenue of $18.10 billion, missing analysts’ estimate of $18.16 billion. The company reported an adjusted loss per share of $3.26, wider than the $2.95 loss expected. Despite a third-quarter net loss of $1.6 billion, Boeing kept its goal of generating $3 to $5 billion in free cash flow this year.
During the quarter, Boeing’s Commercial Airplanes division booked 398 net orders, including 150 for 737 MAX10 airplanes for Ryanair, 50 model 787 airplanes for United Airlines, and another 39 for Saudi Arabian Airlines.
The Commercial Airplanes division delivered 105 airplanes during the quarter and the backlog included over 5,100 airplanes valued at $392 billion. Planemakers get the bulk of the payment when they hand over jets, so delivery numbers are closely watched by investors. For 2023 until the end of September, Boeing delivered 371 planes while its main competitor Airbus delivered 488.
Boeing was aiming to deliver 400 to 450 of its popular 737 jets in 2023 but was forced to temper that goal to 375 to 400 jets after two separate quality issues at the supplier which makes the fuselages. On the 737 program, during the quarter a supplier non-compliance was identified on the aft pressure bulkhead section of certain 737 airplanes. This is not an immediate safety of flight issue and the in-service fleet can continue operating safely, Boeing mentioned.
Despite increased defense spending, Boeing is having trouble to capitalize on already signed fixed price contracts. While Defense, Space & Security third quarter revenue was $5.5 billion, the operating margin was -16.9%, due to a $482 million loss on the VC-25B program – the next Air Force One presidential airplane – driven by higher estimated manufacturing cost related to engineering changes and labor instability, as well as resolution of supplier negotiations.
Results were also impacted by $315 million of losses on a satellite contract due to estimated customer considerations and increased costs to enhance the constellation and meet lifecycle commitments.
Boeing stock price lost 2.54% yesterday reaching $177 after the announcement of the financial data. The company’s stock was at a maximum price of over $440 in 2019 and decreased during the pandemic to $95. In the past 12 months it reached a maximum of over $243 and a minimum of $132. Some investors are reducing positions in the company, at the end of Q3 the number of investors having Boeing in their portfolios decreased with 7%, according to most held stocks on eToro platform report.