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Boeing posts Q1 net loss of $1.2bn on drop in sales

April 28, 2022

The US plane maker also suffered charges related to Russian-Ukraine war

Boeing has posted a net loss of more than $1.2 billion in the first quarter, underpinned by a dip in sales and charges relating to the Russian war in Ukraine.

The loss in the three months to the end of March was nearly $681 million more than the US plane maker suffered in the same period last year.

Revenue dropped 8 per cent year-on-year to almost $14bn in three-month period.

The drop was driven by “lower defence volume and charges on fixed-price defence development programmes”, partially offset by commercial services volume, the company said. The loss per share of $2.06 also “reflects $212m of pre-tax charges for impacts of the war in Ukraine”.

“You will see we still have more work to do … but I remain encouraged with our trajectory and we are on track to generate positive cash flow for 2022,” Dave Calhoun, Boeing president and chief executive, said in an employee memo on Wednesday.

Sales for Boeing’s commercial aircraft unit dropped almost 3 per cent on an annual basis to about $4.2bn in the quarter.

This unit, which delivered 95 aircraft during the quarter, witnessed a 20.6 per cent drop in operating margin that reflects “abnormal costs and period expenses, including charges for impacts of the war in Ukraine and higher research and development expense”.

Boeing has nearly completed the safe return to service of the 737 MAX and the fleet has flown more than one million flight hours since late 2020. The 737 production rate continues to increase and is expected to rise to 31 planes per month during the second quarter.

Commercial Airplanes backlog included nearly 4,200 planes valued at $291bn.

While the first quarter brought new challenges for the industry, Mr Calhoun said he was “proud of our team and the steady progress we are making towards our key commitments”.

'We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA [Federal Aviation Administration] … despite the pressures on our defence and commercial development programmes, we remain on track to generate positive cash flow for 2022,” he said.

On the 787, the company said the rework has been completed on the initial jets and it continues to work closely with the FAA on when deliveries will be resumed.

“The programme is producing at a very low rate and will continue to do so until deliveries resume, with an expected gradual return to five per month over time. The company continues to anticipate 787 abnormal costs of approximately $2bn, with most being incurred by the end of 2023,” Boeing said.

Revenue from defence, space and security decreased 24 per cent to nearly $5.5bn in the first quarter.

The Chicago-based company’s research and development spending increased by more than 26 per cent in the quarter to $633m, Boeing said.

Boeing’s global services unit’s first-quarter revenue increased to $4.3bn, up 15 per cent compared to the previous year's period. During the quarter, the unit secured a fuel-saving digital solutions contract for Etihad Airways' 787 fleet and was awarded a contract for KC-135 horizontal stabilisers from the US Air Force.

Boeing is focused on improving performance as it works through certification requirements and finishing key programmes that will lead to the emergence of new technology and products, Mr Calhoun said.

“Leading with safety and quality, we are taking the right actions to drive stability throughout our operations, deliver on our commitments to customers and position Boeing for a sustainable future,' he said.