Boeing on Wednesday reported a $355 million loss for the first three months of the year as it deals with a quality crisis stemming from a Jan. 5 accident that blew out a panel on one of its planes.
The losses were not as large as investor analysts had expected. Boeing generated more than $16.5 billion in revenue in the first quarter, less than what it reported in the same period last year but slightly more than analysts expected, and burnt through nearly $4 billion in cash.
The explosion of a panel on an Alaska Airlines 737 Max 9 aircraft caused no serious injuries, but it dealt a major blow to the company, and five years after two fatal crashes involving Boeing's 737 Max 8 aircraft, Boeing Concerns about the company's practices have been reignited. Since the Jan. 5 flight, the company has taken steps to improve quality, including expanding inspections, changing work methods, increasing training and increasing employee feedback.
“Regulators, customers, employees, and the flying public have 100 percent confidence in Boeing,” Boeing CEO Dave Calhoun said in a letter to employees Wednesday. I will do my best to do everything I can to make it happen.”
Mr. Calhoun announced last month that he would step down by the end of the year as part of a broader management shakeup. Boeing is also in talks to buy Spirit AeroSystems, a troubled supplier that makes the Max jet's bodies and was part of Boeing until it was spun off two decades ago.
The Federal Aviation Administration has increased oversight of Boeing, capping production of 737s at 38 a month, but production remains well below that level. Regulators have required Boeing to develop a quality improvement plan by the end of May.
Boeing had hoped to produce 50 737s and 10 larger 787s a month starting next year, but analysts say the company is unlikely to meet those goals. Deliveries in the first quarter slowed significantly in the wake of the recent crisis, but the company said it could benefit from an order for dozens of 737 Max 10 aircraft from American Airlines, a jet the FAA has not yet ordered. It reported significant net new orders for 126 aircraft. To prove it. Boeing announced it has an order backlog of 5,600 planes worth $448 billion.
“We certainly face challenging times in the near future,” Calhoun said in a letter to employees. “Shortening delivery times can be difficult for customers and financially. But safety and quality must come first.”
Boeing's commercial aircraft division reported an operating loss of more than $1.1 billion, offset by a $151 million operating profit in its defense division and a $916 million profit in its services division, which provides maintenance support to customers. It was done.
After the Jan. 5 flight, all Max 9 aircraft were temporarily grounded, frustrating Alaska Airlines, United Airlines, and other companies that rely on the aircraft. Both airlines said last week that they would have reported quarterly profits at the beginning of the year had their planes not been grounded.
United Airlines has said it will receive an undisclosed amount of compensation from Boeing Co. to use toward future aircraft purchases, but Alaska Airlines CEO Ben Minicucci told reporters and analysts on a conference call last week that He told List that Boeing paid $162 million for the airline. Minicucci said the payments “strongly reflect” the airline's close relationship with Boeing.
“Alaska needs Boeing, our industry needs Boeing and our country needs Boeing,” he said.
Boeing faced two tense Senate hearings this month. One focused on criticism of the company's safety culture, and the other focused on a whistleblower who questioned the durability of the 787 Dreamliner, a twin-aisle jet often used for long-haul flights. expressed concern. long distance flight. Boeing vehemently denied his claims, saying the plane showed no signs of fatigue from extensive testing and years of commercial flight.
An FAA panel of experts concluded a year-long investigation in February, finding deficiencies in Boeing's safety culture persist despite improvements made after fatal crashes in 2018 and 2019. It has been found. The Committee also found that Boeing had made progress in limiting the interference of employees with delegated oversight duties. On behalf of the FAA, however, the opportunity for retribution still remains.
Boeing said it takes these findings seriously. In a letter to his employees, Calhoun said the company has paused work at more than a dozen locations to host quality discussions with its more than 70,000 employees. . Through these meetings, the company has received over 30,000 improvement suggestions. We also encourage employees to report concerns through our internal 'Speak Up' portal, prompting a surge in reports.
In response to complaints that the company places too much emphasis on financial results, Boeing announced this month that it would more closely match employee pay and quality standards. Flight performance will account for approximately 60% of the scores used to determine annual incentives for Boeing's commercial aircraft division, up from 25% previously.