Boeing Co on Tuesday reported a hefty fourth-quarter loss following a bruising last year, but shares rallied on hopes that early turnaround signs under a new CEO might bear fruit.
The US aviation giant reported a loss of US$3.9 billion as the company continued to experience a hit from a more than seven-week labor strike that shuttered two major assembly plants.
However, chief executive Kelly Ortberg, who joined Boeing in August last year, said the company is making progress.
Photo: AFP
Company officials said they expect to lift 737 MAX production this year and to clear out planes in inventory, improving the outlook for free cash flow later in the year.
Boeing has worked with the US Federal Aviation Administration (FAA) on “an agreed upon path for rate increases” on the 737 MAX, Ortberg told analysts.
Ortberg described a number of operational performance indicators that look at parts shortages, work performed out of sequence and other factors.
“We need to stay disciplined on maintaining a stable production system,” he said. “But early signs are encouraging.”
Boeing’s fourth-quarter loss took the company’s full-year loss — its sixth in a row — to US$11.8 billion. The 31 percent drop in fourth-quarter revenue to US$15.2 billion reflected a hit from fewer plane deliveries, which came in at barely a third of the level in the previous year as the labor stoppage halted output on the 737 MAX and the 777. Boeing’s performance was also marred by a troubled flight in January last year in which a 737 MAX flown by Alaska Airlines made an emergency landing after the plane suffered a mid-flight blowout on a window panel.
Boeing has also continued to suffer from legacy fixed-cost defense contracts that have led to losses for the company.
Ortberg told CNBC that Boeing is “actually a little ahead of where I expected” in terms of ramping up production on the 737 MAX following the strike and intensified process control checks after the Alaska Airlines incident.
Boeing has been producing the MAX at under the 38 per month authorized by the FAA. Analysts view the restoration of output to 38 per month and subsequent production increases as critical to Boeing’s profit outlook.
Ortberg expressed confidence in achieving higher MAX output, telling CNBC “I expect by the second half of the year, we’ll have that approval, and we’ll be moving to a higher production rate.”
Shares of Boeing finished up 1.5 percent.
“It seems investors are focusing on the improvements on the production front and focusing less on the financial results,” Briefing.com said. “We also think investors are looking a few quarters ahead on the hopes of a turnaround.”
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