Boeing CFO comments on deliveries and cash flow after the Max crisis

An American Airlines Boeing 737 MAX 8 flight from Los Angeles approaches for landing at Reagan National Airport shortly after the FAA announced the planes would be grounded by the United States in Washington, U.S., on March 13, 2019 .

Joshua Roberts | Reuters

Boeing will burn through cash this year and new aircraft deliveries in the second quarter will not improve from the first as the manufacturer faces a host of production challenges related to its best-selling aircraft, CFO Brian West said from the company Thursday.

A month ago, West predicted Boeing would generate free cash flow “in the low single-digit billions.” The new forecast shows the rising costs of the aircraft manufacturer's latest crises.

Boeing burned through nearly $4 billion of cash in the first quarter and West said that figure could be similar or “potentially slightly worse” in the second quarter, but that the company would likely go back to cash burn in the second half of 2024 to generate.

The company's aircraft deliveries fell to the lowest level since the pandemic in the first quarter. Most of an aircraft's price is paid when it is handed over to a customer.

Shares of Boeing fell 5% in afternoon trading after West's comments at a Wolfe Research industry conference

“We have frustrated and disappointed our customers because of some of the supply chain issues we are dealing with,” West said at the conference. “And while I understand that frustration, the most important thing we can do for our customers and the industry supply chain is to focus on the actions that are underway right now so that we can stabilize this production system, improve quality and ensure more predictable.”

Boeing CEO Dave Calhoun said in March he would step down by the end of the year, and the company replaced the chairman and CEO of its commercial aircraft unit. In the lead-up to the shake-up, CEOs of major airline customers complained about delivery delays and difficulties scheduling flights due to unexpected disruptions.

Boeing's latest production problems came to light after a door plug blew out of a nearly new 737 Max 9 early this year, just as the company was trying to repair years of reputational damage from two fatal Max crashes in 2018 and 2019.

The accident increased federal scrutiny of the company, whose executives have vowed to root out manufacturing defects and regain the trust of regulators, airline customers and the public.

Next Thursday, Boeing leaders will meet with the Federal Aviation Administration to present the company's plan to improve quality control, the FAA said. The agency gave Boeing 90 days from the end of February to complete the plan.

Other issues have also surfaced, including a pause in deliveries of 737 Max planes to China to assess batteries for the cockpit voice recorder. Boeing said in a statement that it is working with “our Chinese customers on the timing of their deliveries as the Civil Aviation Administration of China completes its investigation of the batteries in the 25-hour cockpit voice recorder assembly unit.”

A parts shortage has also delayed deliveries of 787 Dreamliners, Boeing said. US airlines said last month it would cancel some international flights due to widebody jet delays. Other carriers, including United Airlines And Southwest Airlinessaid they had to scale back some of their growth and hiring plans because of delayed Boeing jets.

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