Boeing cuts 737 Max delivery outlook again as it reports $3.3bn loss

Boeing has cut planned deliveries of its workhorse 737 Max jet for the second time this year, even as airlines worldwide are short of planes.

The US aerospace manufacturer estimated it would deliver 375 of the single-aisle aircraft in 2022. Boeing had planned at the start of the year to deliver about 500 before cutting its forecast to “the low 400s” in July. The 737 Max deliveries will continue at a pace of a little more than 30 a month into 2023, said Brian West, chief financial officer, as the company on Wednesday reported a third-quarter net loss of $3.3bn.

West said customers received 88 737 Max planes in the quarter. Executives said they delivered fewer than promised because supply chain disruptions impeded the flow of jets along the production line.

“We expect [the supply chain] will continue to be challenged over the course of 2023,” said David Calhoun, Boeing chief executive. “What’s our job in this supply-constrained world? Well, in the factories, we don’t push the system too fast. We slow down when we have to and try not to compound problems.”

The 737 Max brought crisis to Boeing after two crashes killed 346 people in Indonesia and Ethiopia in 2018 and 2019. It is continuing to sell aircraft built during the Max’s lengthy grounding following the crashes. Reaching 450 at their height, inventories of the Max were 270 at the end of the quarter, Boeing said.

About half the 270 were reserved for airlines in China, but Boeing is now looking for different buyers for some of them as the country’s Covid-19 restrictions constrain demand for air travel and tensions between Beijing and Washington make it harder for Boeing, a marquee American manufacturer, to sell there.

“We still would like to deliver planes to China,” Calhoun said. “But we also are clear-eyed about the geopolitical risks that are out there, and we’re not going to impart new risks on our investors.”

Boeing surprised Wall Street with its net loss and lower revenue than expected. The company lost $6.18 a share, instead of the 13 cents a share profit that investors had anticipated, and worse than the 60-cent loss per share from the third quarter of 2021.

The company’s $16bn in revenue, though about 5 per cent higher than a year before, was $2bn lower than expected. Shares fell 9.8 per cent to $132.29 in New York.

The loss was driven by $2.8bn in charges in its defence business, including on Air Force One and the troubled KC-46A refuelling tanker. Boeing had agreed to deliver the aircraft for a fixed price, which left it vulnerable as it encountered problems with supply chains, inflation and labour shortages.

But the company also reported $2.9bn in free cash flow — operating cash minus capital expenditures — compared to a $507mn outflow during the same period last year. Boeing expects positive free cash flow for the year, partly aided by a $1.4bn tax benefit from the pandemic-era US Cares Act.

For years, many investors were drawn to Boeing because of the cash the business generated. But following the Max crashes it was criticised for focusing on returns to investors rather than innovation.

But on Wednesday Calhoun defended the focus on free cash flow, calling it “a great metric, period”.

“Our need to focus on free cash flow is the result of us having taken a significant amount of debt on in light of the crisis we had,” he said. “It does not suggest we have stopped investing in new capabilities.”