Boeing Co. generated net cash flows for the first time in nearly three years as growing deliveries of its 737 Max aircraft helped the company support its finances against the rising losses of its 787 planes.
Analysts in Wall Street were surprised at the $494 million free cash flows reported in the fourth-quarter earnings statement Wednesday, which sent the shares higher. Analysts had expected a cash outflow of $1 billion instead.
In a note to his staff, CEO Dave Calhoun said that the company increased the production output of its cash cow 737 from 19 a month in October to 26 currently. This is another sign that the company is turning around after losing more than $31 billion in the three years of the slump caused by the Covid -19 pandemic, grounding of Max, and spate of quality issues.
Boeing’s total recovery is not yet over. The planemaker reported $5.5 billion operating costs for its Dreamliner. It has also written off in its global service divisions and KC-46 tankers. The 787 profits were wiped out as the company had to pay compensation to airlines for the delivery disruptions that caused service losses. Since June last year, Boeing did not deliver any of its marquee wide-body aircraft to address the structural issues on its 100 odd planes in the system.
According to Calhoun, these issues continue to impact the deliveries and financial results, but addressing these issues will help the company in the long run.
As per average estimates compiled by Bloomberg, the Chicago-based planemaker reported a lower fourth-quarter loss of $7.69 share. The revenue dropped to $14.79 billion against analysts’ estimates of $16.7 billion.
The Chicago-based company reduced its total debts to $58.1 billion, down by $4.3 billion as it prepaid a long-term loan and also other debts matured. Investments in marketable securities and cash fell to $16.2 billion, down by $3.8 billion.
Boeing’s share rose 1.3 % before regular trading started Wednesday in New York. It has gained 1.4% during the year while the Dow Jones industrial average dropped by 5.6%
Boeing refused to forecast its financial roadmap for 2022 even as suppliers like General Electric Co. and Raytheon Technologies Corp. reported forecasts when they reported their earnings. Investors look for more details on the Boeings 787 program, the progress on its 737 Max production scale-up, and the rising inventory of its undelivered jets.
According to estimates by Ken Herbert, an analyst with RBC Capital Markets, Boeing had stashed away around 100 Dreamliners, 350 Max, and 25 of 777X in arid parking lots and around its factories. Clearing these inventories will help the company replenish its cash reserves and pay the debts.
Boeing included many of its 787 related expenses and costs in the fourth-quarter results after it determined that the deliveries and clearing inventories would take longer than expected. They also accounted for $3.5 billion pre-tax charges to cover compensation to the Dreamliner customers.
Boeing saw a doubling of the abnormal cost related to inspections and repairs of Dreamliner to $2 billion with an estimate that work will extend through the end of next year.
