Boeing is facing a challenging year ahead, with cash burn expected and no improvement in plane deliveries in the second quarter, according to CFO Brian West.
The company’s initial projection of generating low single-digit billions in free cash flow has been revised due to escalating costs from ongoing crises. The first-quarter cash burn amounted to nearly $4 billion, with similar or slightly worse figures expected for the second quarter.
However, Boeing aims to return to cash generation by the second half of 2024. The first-quarter saw a significant drop in aircraft deliveries, impacting both customers and the supply chain. West acknowledged customer frustration and emphasized the company’s focus on stabilizing production, enhancing quality, and ensuring predictability.
The announcement at the Wolfe Research industry conference caused Boeing’s shares to plummet over 7%, influencing the Dow Jones Industrial Average. CEO Dave Calhoun’s decision to step down by year-end, along with leadership changes within the commercial airplane unit, came amid complaints from major airline customers about delivery delays and operational challenges.
These issues compound Boeing’s ongoing efforts to rebuild its reputation following the 737 Max crashes in 2018 and 2019, with the latest production setbacks adding to the company’s hurdles.
Following the accident, Boeing is under increased federal scrutiny and is striving to rectify production flaws to regain trust from regulators, airlines, and the public. Next week, Boeing leaders will meet with the FAA to present a plan aimed at enhancing quality control within 90 days. Additional issues, such as the pause on 737 Max deliveries to China for cockpit voice recorder battery reviews and a new FAA probe into 787 Dreamliner inspections due to reported misconduct by employees, have surfaced. Parts shortages have also affected Dreamliner deliveries, leading to flight adjustments by airlines like American, United, and Southwest.