Boeing Reports Preliminary Fourth Quarter Results

Rhea-AI Summary

Boeing [NYSE: BA] has announced preliminary Q4 2023 results, expecting revenue of $15.2 billion, with a GAAP loss per share of ($5.46) and negative operating cash flow of ($3.5) billion. The company ended Q4 with $26.3 billion in cash and marketable securities.

Commercial Airplanes division anticipates Q4 revenue of $4.8 billion with an operating margin of (43.9)%. The segment faces pre-tax charges of $1.1 billion, including $0.9 billion for the 777X program due to increased labor costs following the IAM agreement.

Defense, Space & Security expects Q4 revenue of $5.4 billion with an operating margin of (41.9)%. The segment will recognize $1.7 billion in pre-tax charges across multiple programs, including $0.8 billion for KC-46A and $0.5 billion for T-7A due to higher manufacturing costs and production estimates.

Positive

• Successfully completed capital raise to strengthen balance sheet
• Resumed production of 737, 767, and 777/777X aircraft
• Maintained substantial liquidity with $26.3B in cash and marketable securities
• Reached agreement with IAM-represented employees

Negative

• Q4 GAAP loss per share of ($5.46)
• Negative operating cash flow of ($3.5B)
• $1.1B pre-tax charges for Commercial Airplanes division
• $1.7B pre-tax charges for Defense programs
• Commercial Airplanes operating margin of (43.9%)
• Defense division operating margin of (41.9%)
• Lower deliveries due to IAM work stoppage

Insights

Financial Analyst

Boeing's preliminary Q4 results paint a concerning financial picture that extends beyond immediate operational challenges. The $3.5B negative operating cash flow, combined with charges totaling $2.8B across commercial and defense programs, signals deeper structural issues in Boeing's cost management and program execution.

The $26.3B cash position provides some breathing room, but the negative operating margins of 43.9% in Commercial and 41.9% in Defense segments are particularly alarming. These margins reflect not just the IAM work stoppage impact but fundamental challenges in program execution and cost control. The production restart of key programs (737, 767, 777/777X) is positive, but the substantial charges on multiple programs suggest persistent operational inefficiencies.

Most concerning is the ripple effect of the IAM agreement, which will impact costs well into 2026 and beyond. The $0.9B charge on the 777X program and $0.8B on KC-46A indicate that labor cost increases will significantly pressure margins for years to come. The T-7A program's $0.5B charge, primarily affecting future production lots, suggests Boeing may be struggling to maintain competitive pricing in its defense contracts while absorbing higher costs.

Aerospace Industry Analyst

The breadth of program charges across Boeing's portfolio reveals systemic challenges in program execution and cost estimation. The $0.9B charge on the 777X program is particularly significant as it impacts Boeing's future competitiveness in the lucrative widebody market, where maintaining the 2026 delivery timeline for the 777-9 is important for competing with Airbus's A350 family.

The defense segment's struggles, evidenced by charges across five major programs (KC-46A, T-7A, Commercial Crew, VC-25B and MQ-25), indicate potential issues with fixed-price contract structures and initial cost estimates. The $0.8B charge on KC-46A and $0.5B on T-7A suggest these programs may continue to be a drag on profitability even as production ramps up.

The production restart announcement is encouraging but must be viewed in context. The 43.9% negative operating margin in Commercial Airplanes reflects not just temporary disruption but potentially longer-term challenges in production efficiency and cost recovery. The success of these restarts will be important for Boeing's ability to meet customer commitments and rebuild market confidence.

ARLINGTON, Va., Jan. 23, 2025 /PRNewswire/ -- The Boeing Company [NYSE: BA] announced today it will recognize impacts to its financial results related to the IAM work stoppage and agreement, charges for certain Defense, Space & Security programs and costs associated with workforce reductions announced last year when it reports fourth quarter results on January 28. The company expects to report fourth quarter revenue of $15.2 billion, GAAP loss per share of ($5.46), and operating cash flow of ($3.5) billion. Cash and investments in marketable securities totaled $26.3 billion at the end of the quarter.

"Although we face near-term challenges, we took important steps to stabilize our business during the quarter including reaching an agreement with our IAM-represented teammates and conducting a successful capital raise to improve our balance sheet," said Kelly Ortberg, Boeing president and chief executive officer. "We also restarted 737, 767 and 777/777X production and our team remains focused on the hard work ahead to build a new future for Boeing."

Commercial Airplanes results will reflect impacts associated with the IAM work stoppage and agreement including lower deliveries and pre-tax earnings charges of $1.1 billion on the 777X and 767 programs. The 777X program pre-tax charge of $0.9 billion reflects higher estimated labor costs associated with finalizing the IAM agreement and will be incurred over the next several years. The company still anticipates first delivery of the 777-9 in 2026. Commercial Airplanes expects to report fourth quarter revenue of $4.8 billion and operating margin of (43.9) percent.

Defense, Space & Security expects to recognize pre-tax earnings charges of $1.7 billion on the KC-46A, T-7A, Commercial Crew, VC-25B, and MQ-25 programs. The KC-46A program pre-tax charge of $0.8 billion reflects higher estimated manufacturing costs, including impacts of the IAM work stoppage and agreement. The T-7A program pre-tax charge of $0.5 billion was primarily driven by higher estimated costs on production lots in 2026 and beyond. Defense, Space & Security expects to report fourth quarter revenue of $5.4 billion and operating margin of (41.9) percent.

Caution Concerning Forward-Looking Statements

The preliminary estimated financial results for the quarter ended December 31, 2024 included in this press release are preliminary, unaudited and subject to completion, and may change as a result of management's continued review. Such preliminary results are subject to the finalization of quarter-end financial and accounting procedures. The preliminary financial results represent management estimates that constitute forward-looking statements subject to risks and uncertainties. As a result, the preliminary financial results may materially differ from the actual results when they are completed and publicly disclosed. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and other similar words or expressions, or the negative thereof, generally can be used to help identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate.

Forward-looking statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, production quality issues, commercial airplane production rates, our ability to successfully develop and certify new aircraft or new derivative aircraft, and the ability of our aircraft to meet stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government, as well as significant delays in U.S. government appropriations; (5) our dependence on our subcontractors and suppliers, as well as the availability of highly skilled labor and raw materials; (6) work stoppages or other labor disruptions; (7) competition within our markets; (8) our non-U.S. operations and sales to non-U.S. customers; (9) changes in accounting estimates; (10) our pending acquisition of Spirit AeroSystems Holdings, Inc. (Spirit), including the satisfaction of closing conditions in the expected timeframe or at all; (11) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures, including anticipated synergies and quality improvements related to our pending acquisition of Spirit; (12) our dependence on U.S. government contracts; (13) our reliance on fixed-price contracts; (14) our reliance on cost-type contracts; (15) contracts that include in-orbit incentive payments; (16) management of a complex, global IT infrastructure; (17) compromise or unauthorized access to our, our customers' and/or our suppliers' information and systems; (18) potential business disruptions, including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises; (19) potential adverse developments in new or pending litigation and/or government inquiries or investigations; (20) potential environmental liabilities; (21) effects of climate change and legal, regulatory or market responses to such change; (22) credit rating agency actions and our ability to effectively manage our liquidity; (23) substantial pension and other postretirement benefit obligations; (24) the adequacy of our insurance coverage; and (25) customer and aircraft concentration in our customer financing portfolio.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Contact:           Investor Relations: BoeingInvestorRelations@boeing.com
                        Communications: Media@boeing.com 

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SOURCE Boeing

FAQ

What are Boeing's (BA) expected Q4 2023 financial results?

Boeing expects Q4 2023 revenue of $15.2 billion, GAAP loss per share of ($5.46), and negative operating cash flow of ($3.5) billion.

How much are Boeing's (BA) pre-tax charges for the 777X program?

Boeing will record a $0.9 billion pre-tax charge for the 777X program due to higher estimated labor costs following the IAM agreement.

What is Boeing's (BA) cash position at the end of Q4 2023?

Boeing reported $26.3 billion in cash and marketable securities at the end of Q4 2023.

What are the total pre-tax charges for Boeing's (BA) Defense division in Q4 2023?

Boeing's Defense division will recognize $1.7 billion in pre-tax charges across KC-46A, T-7A, Commercial Crew, VC-25B, and MQ-25 programs.

When is Boeing (BA) expecting to deliver its first 777-9 aircraft?

Boeing still anticipates first delivery of the 777-9 in 2026.