Boeing Loses $355 Million in Latest Quarter

baua


Boeing on Wednesday reported a $355 million loss for the first three months of the year, as it deals with a quality crisis stemming from a Jan. 5 flight during which a panel blew off one of its planes.

The loss was not as steep as analysts had expected, and it was smaller than the $425 million loss in the first quarter last year. Boeing brought in more than $16.5 billion in revenue in the first quarter, less than it reported last year, and the company burned through almost $4 billion in cash, in both cases surpassing analyst expectations.

The panel blowout on a 737 Max 9 jet during an Alaska Airlines flight resulted in no major injuries, but the incident dealt a heavy blow to the company, reigniting concerns about Boeing’s practices five years after two fatal crashes involving 737 Max 8 planes. Since the Jan. 5 flight, the company has taken steps to improve quality, including expanding inspections, changing how work is performed, increasing training and soliciting more feedback from employees.

“We are absolutely committed to doing everything we can to make certain our regulators, customers, employees and the flying public are 100 percent confident in Boeing,” Dave Calhoun, Boeing’s chief executive, said in a letter to employees on Wednesday.

Last month, Mr. Calhoun said he would step down by the end of the year, part of a management shake-up. Boeing is also in talks to buy Spirit AeroSystems, a troubled supplier that builds the body of the Max jet and that had been a part of Boeing until it was spun out two decades ago.

The Federal Aviation Administration has increased scrutiny of Boeing, capping 737 production at 38 planes per month, though production remains well below that level. The regulator has demanded that Boeing produce a plan to improve quality by the end of May. On a call with financial analysts, Mr. Calhoun said Boeing had been in regular contact with the F.A.A. as it developed that plan.

Boeing had been hoping to produce 50 737s and 10 larger 787s per month starting next year, but analysts say the company is unlikely to meet that goal. On the call, Mr. Calhoun said the acquisition of Spirit would play a significant role in hitting those targets. The recent crisis contributed to a substantial slowdown in deliveries in the first quarter, though the company reported a respectable 126 net new orders, thanks in large part to an American Airlines order for dozens of 737 Max 10 planes, a jet that the F.A.A. has yet to certify. Boeing said it had an order backlog of 5,600 planes, valued at $448 billion.

“Near term, yes, we are in a tough moment,” Mr. Calhoun said in the letter to employees. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else.”

After the company’s first-quarter results were announced, Moody’s downgraded Boeing’s debt one notch to its lowest investment-grade rating, Baa3. The agency cited the “inadequate performance” of Boeing’s commercial plane division.

That part of the company reported an operating loss of more than $1.1 billion, offset by a $151 million operating profit at its defense division and a $916 million gain at its services division, which provides maintenance support to customers.

After the Jan. 5 flight, all Max 9 planes were briefly banned from flying, frustrating Alaska Airlines, United Airlines and other companies that rely on the plane. Both airlines said last week that they would have reported quarterly profits for the start of the year were it not for the plane’s grounding.

United said it would receive an undisclosed amount of compensation from Boeing for use on future plane purchases, while Alaska’s chief executive, Ben Minicucci, told reporters and analysts on a call last week that Boeing had paid his airline $162 million. Mr. Minicucci described that payment as a “strong reflection” of the airline’s close relationship to Boeing.

“Alaska needs Boeing, our industry needs Boeing, and our country needs Boeing,” he said.

Boeing faced two tense Senate hearings this month, one focused on criticism of the company’s safety culture and another airing the concerns of a whistle-blower who had raised questions about the durability of the 787 Dreamliner, a twin-aisle jet often used for long-distance flights. Boeing has vehemently denied his allegations, saying the plane’s body has shown no signs of fatigue after extensive testing and years of commercial flights.

In February, an F.A.A. expert panel concluded a yearlong investigation, finding that Boeing’s safety culture remains flawed despite improvements made after the fatal crashes in 2018 and 2019. The panel also found that Boeing had made progress in limiting interference of employees who carry out delegated oversight on behalf of the F.A.A., but that opportunities to retaliate remain.

Boeing has said it takes those findings seriously. The company has briefly paused work at more than a dozen sites to host quality discussions with more than 70,000 employees, Mr. Calhoun said in his letter to employees. Through those meetings, the company has received more than 30,000 recommendations for improvements. It has also encouraged workers to file concerns through its internal “Speak Up” portal, prompting a fivefold increase in submissions from the first quarter of last year.

The union that represents engineers and other workers at Boeing said the company had more work to do to protect employees who speak up. On Tuesday, the union, the Society of Professional Engineering Employees in Aerospace, said Boeing had punished two engineers who were authorized to perform some F.A.A. oversight after they raised concerns in 2022 about analyses of the technology used on the 777 and 787 planes.

Managers objected to those concerns at the time, saying that addressing them could be costly and cause delays, according to the union. The engineers eventually prevailed, but later received negative performance reviews, prompting one to quit and the other to file a formal “Speak Up” complaint with Boeing. Now, the union is asking the National Labor Relations Board to compel Boeing to share a report on the situation that it had filed with the F.A.A.

In a statement, Boeing disputed that it had punished the employees for speaking out.

“We have zero tolerance for retaliation and encourage our employees to speak up when they see an issue,” the company said. “After an extensive review of documentation and interviewing more than a dozen witnesses, our investigators found no evidence of retaliation or interference.”

To address complaints that the company has focused excessively on financial results, Boeing said this month that it would more closely align employees’ pay to quality measures. Operational performance will now account for about 60 percent of the score used to determine annual incentives in Boeing’s commercial planes division, up from 25 percent.

Uber, a leading ride-hailing app, has received an aggregator license from the Transport Department of…

Bengaluru-based deep-tech battery recycling startup Metastable Materials has announced the appointment of Daniel Troedsson, a…

From a piazza in the town of Castellabate on the Cilento coast of Italy, you…