U.S. Aerospace giant Boeing has announced a huge loss of $1.64 billion for the third quarter, sending shockwaves through the aviation industry. The loss, reported Wednesday, was attributed to multiple factors, including a slump in the production of their best-selling plane and escalating expenses linked to the construction of two new Air Force One presidential jets, an agency report says.
Boeing's woes were compounded as they revised their production forecast for the 737 Max aircraft, the Associated Press report said.
The company now anticipates producing between 375 and 400 of these planes this year, a substantial reduction from their previous estimate of 400 to 450. This adjustment comes in response to ongoing inspections and the need for additional work to address a pressure-sealing issue in the 737s, leading to production slowdowns and fewer deliveries.
Boeing's third-quarter report also revealed a staggering loss of $482 million incurred on a contract with U.S. Air Force to build two new presidential jets. These losses were primarily attributed to unexpectedly high estimated manufacturing costs, raising concerns about the company's ability to manage government contracts effectively. Additionally, Boeing recorded a $315 million loss on a satellite contract, further compounding its financial struggles, the report added.
Excluding special items, Boeing reported a per-share loss of $3.26 for the quarter. However, there was a glimmer of hope as the company posted a 13% increase in revenue, reaching $18.10 billion. This uptick in revenue partially offset the financial setbacks experienced during the quarter, indicating that Boeing remains resilient despite its recent challenges.
Boeing, headquartered in Arlington, Virginia, now faces a critical period as it grapples with production issues and cost overruns, while striving to regain its financial footing in a dynamic aerospace industry. The aviation world will be closely watching the company's strategies and initiatives in the coming months to determine its path to recovery and stability.
The AP report adds:
Analysts expected the company to lose $3.18 per share on revenue of $18.01 billion, according to a FactSet survey of analysts.
The company delivered 105 commercial planes in the quarter, down from 112 a year earlier, as it struggled with problems that slowed production of the 737 Max passenger jet. Deliveries of 737s slipped to 70 from 88 in the same period last year, but deliveries of 787 Dreamliners rose.
CEO David Calhoun said that “despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term.” He said the company was working to stabilize its supply chain and steadily increase aircraft production rates.
Shares of the company rose about 3% in premarket trading.