Boeing's suspension of 2024 performance guidance shows investors that the company is focusing on solving a series of troubling quality issues. Earlier this month, a door fell off a 737 Max aircraft and almost caused a catastrophe. Boeing's earnings report on Wednesday showed that the company's fourth-quarter profit, cash flow and revenue all exceeded analysts' expectations. But the earnings gave way to Boeing's latest 737 Max crisis and its response to subsequent regulatory crackdowns.
On January 5, an Alaska Airlines 737 Max 9 made an emergency landing at Portland International Airport after a door fell off.
"While we often use this time of year to share or update our financial and operating goals, now is not the time to do so," CEO Dave Calhoun told employees in a memo. "We will focus on every aircraft while doing everything possible to support our customers, follow guidance from regulators and ensure everything we do meets the highest safety and quality standards."
Calhoun was expected to outline Boeing's outlook in a call with analysts later in the day as the U.S. Federal Aviation Administration (FAA) intensifies scrutiny of Boeing's manufacturing and supplier systems. New FAA Administrator Michael Whitaker asked Boeing to limit 737 production to current levels until quality improves, and vowed to aggressively expand oversight of all Boeing plants.
Investors have long been accustomed to scrutinizing Boeing's financial metrics and annual targets. Fourth-quarter earnings are particularly critical for Boeing, as the planemaker typically makes annual forecasts for its cash flow and deliveries of its two flagship products, the 737 Max and 787 Dreamliner.
Now Boeing is asking investors for patience as customers, regulators and lawmakers demand that Calhoun take meaningful steps to address a rash of manufacturing shortages in the post-pandemic world.
Boeing CEO Dave Calhoun in Washington, D.C., on January 24
Calhoun emphasized in his message to employees that he is focused on improving quality. The CEO said customers, regulators and lawmakers had expressed frustration with him.
“Our factory employees know better than anyone what we have to do to improve,” said Calhoun, who encourages employees to ask questions that need to be addressed. "We're going to take our time, we're not going to rush things, we're going to take our time and get things done."
fourth quarter
The strong finish to 2023 provides a glimpse into Boeing's expectations for 2024 before the Alaska Airlines incident on January 5. Analysts had predicted that Boeing would post its first full-year profit in a decade this year as it ramps up production of 737s and 787s.
Boeing reported a fourth-quarter adjusted loss of 47 cents per share, while analysts expected a loss of 76 cents per share, according to aggregated data. Revenue of $22 billion was better than Wall Street forecasts of $21.1 billion. Free cash flow was $2.95 billion, also beating expectations of $2.09 billion.
Boeing shares rose less than 1% in pre-market trading in New York. As of Tuesday's close, Boeing shares were down 23% year to date, the worst performer among the 30 Dow Jones Industrial Average stocks.