Boeing shares sink on new 777X setbacks, series of accusations by Reuters – newsdubai

By Eric M. Johnson and Abhijith Ganapavaram

(Reuters) – Boeing (NYSE 🙂 Co said on Wednesday that it stopped 777X production until 2023 due to a new delay in its commissioning due to certification issues and weak demand, with $ 1.5 billion in abnormal costs for mini-jumbo the program.

Shares of the U.S. aircraft maker fell 7% to $ 155.46 in early trading – a low of nearly 1-1 / 2 years – after a quarterly loss, revealing more than $ 1.2 billion in fees associated with vendor costs and technical issues on Air Force One. presidential plane, trainer jet and the war in Ukraine.

“Another awful set of results,” Agency Partners analyst Nick Cunningham said in a customer note, adding that a “general sense of disorder continues”, marking that net debt rose to a new high of over $ 45 billion.

On the positive side, Boeing said it presented a certification plan to U.S. air safety regulators in a move toward resuming deliveries of its 787 Dreamliner, halted for nearly a year of inspections and repairs in an industrial headache that cost about $ 5.5 billion.

The double-hulled Dreamliner, together with the 737 MAX, is crucial to Boeing’s financial health, which is trying to recover from successive crises.

It has produced the Dreamliner jets at a low speed while performing inspections and repairs for structural defects in the midst of intense regulatory control.

Boeing has “completed the required work on the first aircraft and is conducting control flights,” CEO Dave Calhoun told employees in a note Wednesday, a development that should encourage airlines that have cut back on flying long-haul routes due to delivery delays.

Calhoun did not specify when Boeing would resume delivery of the Dreamliner. Reuters reported last week that it had informed key airlines and spare parts suppliers that deliveries would resume in the second half of this year.

Boeing also confirmed reports of a delay in the handover of the first 777X jet to 2025, from the previous target in late 2023, but said it remained confident in the program.

Calhoun said stoppages in 777-9 production were based on a longer safety certification timeline, a risk reported by Reuters in February.

“We’re delaying it long enough to believe we can get to the finish line,” Calhoun told CNBC after Boeing announced its results.

He told employees that the break would help minimize inventory and the number of jets that require retrofitting, while increasing cargo capacity with a recently launched cargo spinoff of the 777X, the world’s largest twin-engine passenger aircraft.

“We are concerned that this delay (in 777X delivery) may allow airlines to cancel without penalty,” said Citi Research analyst Charles Armitage.

Reuters reported last month that the Federal Aviation Administration had warned Boeing that existing certification plans for the 737 MAX 10 and 777X were “obsolete and no longer reflect program activities.”

Boeing reiterated that it expects its 737 MAX production speed to reach 31 aircraft per month in the second quarter, a slight delay from what some analysts expected, although industry sources have not ruled out a decline.

The aircraft manufacturer said in its first quarter earnings report that it was on track to generate positive cash flows for 2022 as it increases deliveries of the 737 MAX cash-cow narrowbody aircraft.

It reported a quarterly core loss per share of $ 2.75 compared to a loss of $ 1.53 per share a year ago. Revenue fell to $ 13.99 billion from $ 15.22 billion.

Like others in the aerospace industry, Boeing is struggling with supply chain shortages, inflation and fallout from the coronavirus pandemic and the war in Ukraine.

It booked a $ 660 million quarterly charge on its VC-25B – commonly known as the Air Force One – due to higher supplier costs and technical issues and schedule delays.

It recorded $ 367 million in fees for its T-7A Red Hawk trainer jet due to inflation, supply chain issues and pandemic-related impacts.

It posted pre-tax fees of $ 212 million due to the effects of the war in Ukraine and international sanctions against Russia, which pose a risk to material supplies and air orders.

“This was another terrible quarter from Boeing,” Vertical Research Partners analyst Rob Stallard told customers. “And what we think will really worry investors is that we keep getting MORE bad news.”