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Boeing ( BA ) Q2 2022 earnings miss estimates

Boeing on Wednesday stuck to its forecast to return to free cash flow this year as it prepares to resume deliveries of its 787 Dreamliner planes after manufacturing defects halted deliveries for much of the past two years.

The company’s second-quarter results fell short of analysts’ estimates. Weakness in its defense unit dragged down the results, but was partially offset by strength in its commercial aircraft unit. Aircraft deliveries rose to 121 in the second quarter from 79 a year ago, while commercial aircraft revenue rose 3% to more than $6.2 billion.

The company is fresh from winning high-profile orders at the UK’s Farnborough Airshow, such as those for 100 737 Max 10s from Delta Air Lines. Customers of Boeing and rival Airbus have benefited from a recovery in travel after demand for flights fell during the Covid pandemic.

Boeing turned in operating cash flow of $81 million in the quarter after burning through $483 million in the same period last year. The Arlington, Virginia-based company reported net income of $160 million, down 72% from last year on revenue of $16.68 billion, which was down 2% from the second quarter of 2021.

CEO Dave Calhoun earlier this month said the company produces an average of 31 737 Max jetliners each month. He said Boeing would not ramp up production too quickly because of supply chain and labor constraints. Rival Airbus has expressed similar concerns.

“Even with high demand, we will not chase production rates or push our system too quickly,” Calhoun said in a staff memo Wednesday. “With safety and quality at the forefront, we will prioritize stability and predictability.” He highlighted supply constraints at engine makers during a quarterly earnings call Wednesday with analysts.

Calhoun also reiterated that Boeing is “in the final stages” of preparations to resume deliveries of its wide-body 787 Dreamliners, which have been halted for more than a year due to production defects.

In January, Boeing said the releases would cost it $5.5 billion, including $2 billion in irregular manufacturing costs, as it pulled back production to avoid stockpiling. The company recorded $283 million of that in the second quarter.

Returning 787 deliveries is key for Boeing because customers pay most of an aircraft’s price when they take delivery of the planes, although the company warned it would likely have to compensate airlines for delivery delays.

In a call with analysts, the Boeing CEO said the company is working to have the Max 7 and Max 10 models, the smallest and largest in the family, respectively, certified by the FAA by the end of the year. Delays without exceptions could force Boeing to add new cockpit warning systems under legislation that tightened aircraft certification requirements after the Max’s fatal crashes in 2018 and 2019.

Regulators around the world grounded the planes after the second crash. The aircraft began returning to service in late 2020, although China has not yet signed off on allowing it to fly there.

Boeing ended the quarter with 290 undelivered Max planes, and about half of those are destined for customers in China, CFO Brian West said during the analyst call. Peak deliveries this year will be in the low 400s, down from the roughly 500 the company forecast earlier this year.

“Given this uncertainty with our customers in China, we now expect more aircraft deliveries from the inventory to be carried over to 2024,” West said.

Here’s how the company performed compared to analyst estimates polled by Refinitiv:

  • Adjusted loss per share: 37 cents versus an expected loss of 14 cents.
  • Income: $16.68 billion versus $17.57 billion expected.

Revenue at the company’s defense unit fell 10 percent from a year earlier, and Boeing took a $147 million charge on the MQ-25 unmanned aerial refueler due to higher costs.

The company also took a $93 million charge for the Starliner astronaut capsule, which brings the program’s cost overruns to $688 million to date. Boeing successfully completed its second Starliner uncrewed flight test in May and is now preparing for its first manned launch next week.

Boeing shares have fallen more than 22% so far this year by Tuesday’s close. The stock was down 0.2% in afternoon trading on Wednesday, giving up earlier gains.

of CNBC Michael Sheetz and Ian Krietzberg contributed to this report.

Boeing ( BA ) Q2 2022 earnings miss estimates

Source link Boeing ( BA ) Q2 2022 earnings miss estimates

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