Boeing Reports Preliminary Third Quarter Results

Rhea-AI Summary

Boeing [NYSE: BA] announced preliminary Q3 2024 results, expecting revenue of $17.8 billion, a GAAP loss per share of ($9.97), and operating cash flow of ($1.3) billion. The company faces significant challenges, including:

1. Commercial Airplanes: $3.0 billion pre-tax charges on 777X and 767 programs. 777-9 delivery delayed to 2026, 777-8 freighter to 2028. 767 freighter production to conclude.

2. Defense, Space & Security: $2.0 billion pre-tax charges on T-7A, KC-46A, Commercial Crew, and MQ-25 programs.

These impacts are due to certification delays, IAM work stoppage, and higher estimated costs. Boeing emphasizes the need for strategic decisions and structural changes to remain competitive long-term.

Positive

• Cash and investments in marketable securities totaled $10.5 billion at quarter-end
• Strategic decisions and structural changes being made to improve long-term competitiveness

Negative

• Expected Q3 GAAP loss per share of ($9.97)
• Negative operating cash flow of ($1.3) billion in Q3
• $3.0 billion pre-tax charges on 777X and 767 programs
• 777-9 delivery delayed to 2026, 777-8 freighter delayed to 2028
• Conclusion of 767 freighter production
• $2.0 billion pre-tax charges on Defense, Space & Security programs
• Commercial Airplanes expected Q3 operating margin of (54.0) percent
• Defense, Space & Security expected Q3 operating margin of (43.1) percent

Insights

Financial Analyst

Boeing's Q3 preliminary results reveal significant challenges across multiple segments. The $17.8 billion revenue and $1.3 billion negative operating cash flow indicate severe operational issues. The $3.0 billion charges in Commercial Airplanes, particularly the 777X program delays, suggest ongoing certification hurdles and production difficulties. The decision to end 767 freighter production signals a strategic shift. In Defense, Space & Security, $2.0 billion in charges across various programs points to cost overruns and contract performance issues. The substantial GAAP loss per share of $9.97 will likely concern investors. While Boeing maintains $10.5 billion in cash and marketable securities, the negative cash flow trend is worrying. These results may lead to increased scrutiny of Boeing's management and strategy, potentially impacting investor confidence in the short to medium term.

Aerospace Industry Expert

The delays in the 777X program, now pushed to 2026 for the 777-9 and 2028 for the 777-8 freighter, represent a significant setback for Boeing's commercial aircraft strategy. These postponements not only affect Boeing's competitive position against Airbus but also impact airlines' fleet planning. The decision to end 767 freighter production, while continuing the military variant, indicates a shift towards defense-focused operations for this airframe. In the defense sector, charges on programs like T-7A and KC-46A suggest persistent technical and financial challenges in military aircraft development. The IAM work stoppage's impact across multiple programs highlights the vulnerability of Boeing's production to labor disputes. These issues collectively point to systemic challenges in program management, cost control and timely delivery across Boeing's portfolio, which could have long-lasting effects on the company's market position and financial health.

ARLINGTON, Va., Oct. 11, 2024 /PRNewswire/ -- The Boeing Company [NYSE: BA] announced today it will recognize impacts to its financial results related to charges for certain programs across the Commercial Airplanes and Defense, Space & Security segments and the IAM work stoppage when it reports third quarter results on October 23. The company expects to report third quarter revenue of $17.8 billion, GAAP loss per share of ($9.97), and operating cash flow of ($1.3) billion. Cash and investments in marketable securities totaled $10.5 billion at the end of the quarter.

"While our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company," said Kelly Ortberg, Boeing president and chief executive officer. "These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term. We are also focusing on areas that are critical to our future and will ensure we have the balance sheet necessary to invest, support our people and deliver for our customers."

Commercial Airplanes expects to recognize pre-tax earnings charges of $3.0 billion on the 777X and 767 programs. The company now anticipates first delivery of the 777-9 in 2026 and the 777-8 freighter in 2028, resulting in a pre-tax earnings charge of $2.6 billion. This schedule and resulting financial impact are based on an updated assessment of the certification timelines to address the delays in flight testing of the 777-9, as well as anticipated delays associated with the IAM work stoppage. Commercial Airplanes also plans to conclude production of the 767 freighter and recognize a $0.4 billion pre-tax charge on the program, which also reflects impacts from the IAM work stoppage. Beginning in 2027, the company will solely produce 767-2C aircraft in support of the KC-46A Tanker program. Commercial Airplanes expects to report third quarter revenue of $7.4 billion and operating margin of (54.0) percent.

Defense, Space & Security expects to recognize pre-tax earnings charges of $2.0 billion on the T-7A, KC-46A, Commercial Crew, and MQ-25 programs. The T-7A program pre-tax charge of $0.9 billion was driven by higher estimated costs on production contracts in 2026 and beyond. The KC-46A program pre-tax charge of $0.7 billion reflects the decision to conclude production on the 767 freighter and impacts of the IAM work stoppage. Results also include unfavorable performance on other programs. Defense, Space & Security expects to report third quarter revenue $5.5 billion and operating margin of (43.1) percent.

Caution Concerning Forward-Looking Statements

The preliminary estimated financial results for the quarter ended September 30, 2024 included in this press release are preliminary, unaudited and subject to completion, and may change as a result of management's continued review. Such preliminary results are subject to the finalization of quarter-end financial and accounting procedures. The preliminary financial results represent management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial results may materially differ from the actual results when they are completed and publicly disclosed. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and other similar words or expressions, or the negative thereof, generally can be used to help identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate.

Forward-looking statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, production quality issues, commercial airplane production rates, our ability to successfully develop and certify new aircraft or new derivative aircraft, and the ability of our aircraft to meet stringent performance and reliability standards; (4) our pending acquisition of Spirit AeroSystems Holdings, Inc. (Spirit), including the satisfaction of closing conditions in the expected timeframe or at all, (5) changing budget and appropriation levels and acquisition priorities of the U.S. government, as well as significant delays in U.S. government appropriations; (6) our dependence on our subcontractors and suppliers, as well as the availability of highly skilled labor and raw materials; (7) work stoppages or other labor disruptions; (8) competition within our markets; (9) our non-U.S. operations and sales to non-U.S. customers; (10) changes in accounting estimates; (11) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures, including anticipated synergies and quality improvements related to our pending acquisition of Spirit; (12) our dependence on U.S. government contracts; (13) our reliance on fixed-price contracts; (14) our reliance on cost-type contracts; (15) contracts that include in-orbit incentive payments; (16) unauthorized access to our, our customers' and/or our suppliers' information and systems; (17) potential business disruptions, including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises; (18) potential adverse developments in new or pending litigation and/or government inquiries or investigations; (19) potential environmental liabilities; (20) effects of climate change and legal, regulatory or market responses to such change; (21) credit rating agency actions and changes in our ability to obtain debt financing on commercially reasonable terms, at competitive rates and in sufficient amounts; (22) substantial pension and other postretirement benefit obligations; (23) the adequacy of our insurance coverage; and (24) customer and aircraft concentration in our customer financing portfolio.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Contact:           Investor Relations: BoeingInvestorRelations@boeing.com
                        Communications: media@boeing.com

 

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SOURCE Boeing

FAQ

What is Boeing's (BA) expected revenue for Q3 2024?

Boeing expects to report third quarter revenue of $17.8 billion for Q3 2024.

When is the new expected delivery date for Boeing's (BA) 777-9 aircraft?

Boeing now anticipates the first delivery of the 777-9 in 2026.

What pre-tax charges is Boeing (BA) recognizing in its Commercial Airplanes segment?

Boeing's Commercial Airplanes segment expects to recognize pre-tax earnings charges of $3.0 billion on the 777X and 767 programs.

How much are the pre-tax charges in Boeing's (BA) Defense, Space & Security segment?

Boeing's Defense, Space & Security segment expects to recognize pre-tax earnings charges of $2.0 billion on various programs including T-7A, KC-46A, Commercial Crew, and MQ-25.

What is Boeing's (BA) expected GAAP loss per share for Q3 2024?

Boeing expects to report a GAAP loss per share of ($9.97) for Q3 2024.