Boeing shares took a hit following reports that a senior company official predicted another quarter of low plane deliveries, likely resulting in negative cash flow for the entirety of 2024.
Shares of the aerospace giant had fallen by 5.3 percent after Chief Financial Officer Brian West indicated that the cash performance in the second quarter could be “slightly worse” than the first quarter, during which Boeing burned through $3.9B in cash due to high operating expenses and minimal revenue from reduced plane deliveries, AFP reported.
The company had previously anticipated generating positive cash flow in the low-single digit billions for 2024.
However, on Thursday, West retracted that forecast, suggesting the company would likely experience negative cash flow for the year.
West mentioned that the latter half of 2024 should see positive cash flow, driven by increased plane deliveries, higher income from a significant military contract, and reduced costs associated with storing planes.
Nevertheless, these gains are not expected to counterbalance the losses incurred in the first half of 2024, according to West.
Boeing’s difficulties
Boeing’s poor financial outlook is linked to a reduced production rate for the 737 MAX following a near-catastrophic incident on an Alaska Airlines flight on January 5.
Following that incident, in which a fuselage panel blew out mid-flight, Boeing has adjusted its manufacturing processes, introduced additional quality control checks, and implemented temporary production pauses to prioritise safety.
Moreover, Boeing has recently halted deliveries to China due to concerns about a lithium battery raised by Chinese aviation authorities, West said.
The company is collaborating with Chinese officials, “but that will very likely impact this quarter’s deliveries and our cash flow”, West said.
Boeing has been under intense scrutiny from the Federal Aviation Administration, which has required the company to submit a comprehensive action plan to address safety issues by the end of May.
