Boeing shares came under pressure Thursday after a top company official forecast another quarter of meager aircraft deliveries, likely resulting in negative cash flows for all of 2024.
Shortly after noon in New York, the aerospace giant’s shares fell 5.3 percent after Chief Financial Officer Brian West said second-quarter cash performance could be “slightly worse” than the first quarter, in which Boeing posted 3.9 billion dollars in cash debt burned. to high operating costs and minimal revenues due to reduced aircraft deliveries.
Boeing had previously forecast positive cash flow generation in the low single-digit billions by 2024. But on Thursday, West withdrew that forecast, indicating the company would likely have negative cash flow generation this year.
West said the second half of 2024 itself should be positive in terms of cash flow, due to higher aircraft deliveries, higher revenues from a key military contract and lower costs associated with keeping aircraft in inventory.
But the gains are not expected to offset losses in the first half of 2024, according to West.
Boeing’s weak financial outlook is related to a reduced production cadence for the 737 MAX after a near-catastrophic Jan. 5 incident involving an Alaska Airlines plane.
In the wake of that problem, in which a fuselage panel blew out mid-flight, Boeing has adjusted its production procedures, added more quality controls and taken temporary production pauses to emphasize safety.
In addition, Boeing also recently halted deliveries to China due to a lithium battery issue raised by Chinese aviation officials, West said.
Boeing is working with Chinese officials “but that will very likely have an impact on deliveries in our cash flow in the quarter,” West said. Boeing has come under intense scrutiny from regulators at the Federal Aviation Administration, which has required the company to submit a comprehensive action plan to address the safety issues by the end of May.
West said Boeing expects “good feedback” from the FAA next week on improvements, including increased oversight and collaboration with contractor Spirit AeroSystems.
Boeing has been working on a deal to acquire Spirit, which was once part of Boeing before being spun off in 2005.
West said he is hopeful he will “get something signed” in the second quarter on a deal to acquire Spirit, which also does work for Boeing rival Airbus.
West said Spirit still needs to address the future of programs for other customers.
