Boeing Reports $11.8 Billion Annual Loss Following Crisis-Driven Year

Boeing Reports $11.8 Billion Annual Loss Following Crisis-Driven Year

Boeing Reports $11.8 Billion Annual Loss After Crisis-Ridden Year

(Reuters) - Boeing posted a significant annual loss of $11.83 billion, its largest since 2020, reflecting the challenges the company faces in its ongoing recovery from multiple crises. The U.S. aerospace giant struggled with setbacks in both its commercial and defense units, as well as the aftermath of a severe strike by U.S. West Coast factory workers.

The loss highlights the tough road ahead for CEO Kelly Ortberg, who is tasked with stabilizing the company amid fierce competition from Airbus and growing scrutiny from regulators and customers due to previous missteps. Despite these setbacks, Ortberg remains optimistic about Boeing’s long-term prospects.

In a conversation with CNBC, Ortberg indicated that Boeing expects to deliver a higher number of 737 MAX jets, targeting “the upper 30s” in January deliveries, up from 17 in December. The 737 MAX remains the company’s top-selling aircraft, but the delivery race with Airbus continues to intensify.

Shares of Boeing rose by 4.2% in premarket trading following the announcement. The company refrained from providing specific guidance for the upcoming year but reaffirmed its goal of generating $10 billion in annual free cash flow by 2025 or 2026, a target that analysts now expect to be delayed.

Financial Performance Overview

In the fourth quarter of 2024, Boeing reported a $3.86 billion loss, largely due to “disappointing” charges in several fixed-price defense programs. The company’s overall cash burn for the quarter stood at $4.1 billion, slightly better than analysts’ expectations of $4.26 billion.

For the entire year, Boeing’s cash burn reached $14.3 billion, a sharp decline compared to the $4.43 billion cash flow generated in 2023. This alarming figure underscores the company’s ongoing struggle to regain profitability amid a volatile market and operational challenges.

Defense and Production Setbacks

The company’s defense sector was particularly impacted, with the defense, space, and security division incurring a loss of $5.41 billion in 2024. Overruns in fixed-price programs have been a major contributor to these losses, though Ortberg noted that the company had conducted thorough reviews of its troubled defense contracts.

Ortberg also discussed Boeing’s efforts to restore stability to its production lines, particularly after the mid-air panel blowout involving a nearly new 737 MAX last January, which had raised safety concerns. However, the company’s plans to return to an output rate of five 787 jets per month by the end of 2024 showed some progress.

Cultural and Operational Reforms

A key part of Boeing’s recovery strategy involves fixing the company’s internal culture, which Ortberg described as “perhaps the most important change we need to make.” The company is working on a multi-year initiative to rebuild its culture and ensure that operational issues do not continue to hamper its performance.

Ortberg also emphasized that the company remains focused on stabilizing and ramping up production of existing aircraft models. Despite the challenges, Boeing is continuing to make progress on certifying its new 777X widebody, which resumed flight tests earlier this month.

Looking Ahead

In his statement to employees, Ortberg reiterated the company’s commitment to “streamlining our portfolio” and investing in core businesses while reducing exposure to areas deemed non-essential to Boeing’s future. This includes working with high-profile partners, such as Tesla CEO Elon Musk, to accelerate the delivery of the delayed Air Force One project.

However, Ortberg cautioned that Boeing is not planning to initiate new aircraft programs in the immediate future, focusing instead on resolving existing production and certification challenges, including finalizing the anti-icing design for the 737-7 and -10 models.

Conclusion

Boeing’s financial difficulties in 2024 underline the complexity of its recovery process. Despite efforts to stabilize production and improve its cultural and operational foundations, the company continues to face significant challenges, both from competitors and internal inefficiencies. As Boeing navigates through this tumultuous period, its future depends on its ability to address production setbacks, resolve issues in defense contracts, and regain investor confidence.

Reporting by Abhijith Ganapavaram in Bengaluru, Allison Lampert in Montreal, and Dan Catchpole in Seattle; additional reporting by David Shepardson in Washington; Editing by Anil D’Silva and Rod Nickel.

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