Boeing has much to prove, says CEO

Boeing Co has “much to prove” to regain the confidence of regulators and customers after a midair cabin-panel blowout of a 737 MAX aircraft, CEO Dave Calhoun said on Wednesday, adding that the plane maker will “go slow” as it faces a “serious challenge”.

As expected, Calhoun did not offer a financial or delivery forecast for 2024, stating that the company must focus on delivering quality planes.

“We will not rush the system and we will take our time to do it right,” Calhoun said in a letter to employees, while voicing confidence in Boeing’s recovery from the current crisis.

The accident involving an Alaska Airlines-operated MAX 9 jet in January has turned into a full-blown safety and reputational crisis for the plane maker, potentially leading to slower jet production and a loss of more narrow-body market share to Airbus.

Boeing said on Wednesday that 737 aircraft are being produced at a previously outlined rate of 38 a month, a level that it plans to maintain after the US Federal Aviation Administration (FAA) barred the company from lifting production, while increasing its oversight.

The 787 production rate was at five a month, Boeing said, adding that it resumed 777X production during the fourth quarter.

Increasing production of 737 MAX jets is crucial to Boeing’s recovery from a separate safety crisis arising from two fatal crashes in 2018 and 2019 and the subsequent aerospace slump that followed due to the onset of the Covid-19 pandemic.

“We’ve taken significant steps over the last several years to strengthen our safety and quality processes, but this [Alaska Air] accident makes it absolutely clear that we have more work to do,” Calhoun said, amid mounting pressure on the company’s top brass.

He also pointed to an announcement by Boeing in January that it would add further quality inspections for the 737 MAX and deploy a team to supplier Spirit AeroSystems, which makes and installs the plug door involved in the incident.

For the fourth quarter, Boeing reported an adjusted per share loss of 47c, compared with an adjusted loss of $1.75 a year ago. Revenue rose 10% to $22bn.

Quarterly free cash flow fell to $2.95bn from $3.13bn. The company’s ailing defence business logged $139m in losses on fixed-price development programmes.

In its earnings release, Boeing did not provide an update to its 2025/26 cash flow and MAX production forecast amid lingering industry doubts over whether the plane maker will be able to achieve those targets after the FAA’s unprecedented decision.

During its investor day in November 2022, Boeing projected free cash flow of about $10bn by 2025/26 and 737 production of 50 a month.

The plane maker, long a symbol of the US’s manufacturing prowess, has yet to consistently report positive cash flows as it faced difficulties in raising production in the past two years due to a fractured supply chain and nagging quality issues.

Reuters