Boeing surprises with positive cash flow, flags supply-chain constraints
By Abhijith Ganapavaram and Rajesh Kumar Singh
(Reuters) -Boeing Co on Wednesday shocked Wall Road by producing money from operations within the second quarter and caught to its money stream objective for the yr in an indication the planemaker was steadily overcoming expensive manufacturing snarls.
The Virginia-based planemaker projected increased money stream within the second half and subsequent yr from an anticipated step-up in deliveries of 737 and 787 jets.
The corporate stated supply-chain constraints have capped its skill to ramp up jet manufacturing regardless of “vital” demand. It now expects to ship fewer 737 MAX jets this yr because of provide points and delays in deliveries to Chinese language clients.
Boeing’s shares have been up about 0.1% at $156.05 in afternoon commerce.
Resuming deliveries of 787 Dreamliners and clearing inventories of its cash-cow 737 Max are very important for Boeing to emerge from overlapping crises: the pandemic and the grounding of its best-selling mannequin after deadly crashes. This has drained its money and saddled Boeing with debt.
Chief Govt Dave Calhoun stated Boeing was working with regulators for certifications by the tip of this yr of the shorter 737 Max 7 and longer 737 Max 10 variants, and was in “remaining phases” of making ready to restart 787 Dreamliner deliveries.
“We’re on the verge of returning to the 87 supply course of, Calhoun stated on an investor name, however declined to provide a timeline for resumption of the wide-body jet’s deliveries.
American Airways final month stated the deliveries are anticipated to renew in early August.
SUPPLY-CHAIN CONCERNS
The supply delays have made it more durable for Boeing’s clients to ramp up capability and sustain with a rebound in journey demand. The corporate and its rival Airbus are additionally grappling with supply-chain considerations.
These considerations dominated final week’s Farnborough Airshow the place suppliers and producers stated they have been scrambling to supply every part from uncooked supplies to small digital parts to maintain manufacturing shifting.
“We proceed to expertise actual constraints,” Brian West, Boeing’s chief monetary officer, advised buyers.
West stated the corporate has elevated its presence on the services of suppliers and arrange groups of specialists to handle provide crunch in numerous areas, together with engines, uncooked supplies and semiconductors.
Whereas the corporate has not seen any pullback in demand for plane, it stated provide bottlenecks will decide manufacturing in addition to supply charges for 737 and 787 jets.
Boeing stated it goals to stabilize 737 manufacturing price at 31 a month and expects MAX deliveries this yr to be nearer to the “low 400s”, down from about 500 estimated earlier.
It posted a wider-than-expected adjusted lack of 37 cents per share within the quarter by way of June because of costs at its protection, house & safety enterprise unit. Working money stream got here in at $81 million within the quarter.
Total, Boeing burned $182 million in money within the quarter by way of June, far decrease than an outflow of $3.6 billion within the first quarter. Analysts had anticipated a money burn of $1.2 billion, as per Refinitiv knowledge.
“Whereas Q2 outcomes have been nonetheless removed from good, that is Boeing’s cleanest quarter shortly,” Melius Analysis analyst Robert Spingarn stated.
Boeing’s money stream has turn into a focus for buyers, because the planemaker borrowed closely to wade by way of successive crises attributable to the 737 MAX grounding and the pandemic. The corporate’s debt stood at $57.2 billion as of June 30.
(Reporting by Abhijith Ganapavaram in Bengaluru and Rajesh Kumar Singh in Chicago; Modifying by Saumyadeb Chakrabarty, Nick Zieminski and David Gregorio)
