Boeing, the aerospace giant, reported better-than-expected first-quarter results on Wednesday, despite facing a tumultuous period headlined by the 737 Max crisis. The company posted a narrower core loss per share of $1.13, beating Wall Street estimates of $1.72, while revenue came in at $16.57 billion, surpassing forecasts of $16.25 billion.
However, the positive earnings report was overshadowed by ongoing concerns surrounding the safety of Boeing's 737 Max aircraft. The company's troubles began early in 2024 when an Alaska Airlines 737-9 MAX jet suffered a high-profile door plug blowout, leading to the grounding of its 737-9 MAX fleet and increased scrutiny of Boeing's production and safety processes.
In a statement, Boeing president and CEO Dave Calhoun acknowledged the challenges, saying, "Our first quarter results reflect the immediate actions we've taken to slow down 737 production to drive improvements in quality. We will take the time necessary to strengthen our quality and safety management systems and this work will position us for a stronger and more stable future."
Despite the positive earnings surprise, Boeing shares turned lower in mid-day trading after U.S. Transportation Secretary Pete Buttigieg announced that the planemaker won't be able to increase its 737 Max production rates until the end of a 90-day Federal Aviation Administration quality-control probe, which started in late February.
The company's financial performance has been hampered by the 737 Max crisis, with Boeing reporting only one profitable quarter over the past four years. Adjusted free cash flow for the quarter was negative $3.9 billion, putting its longer-term goal of $10 billion in free cash flow by 2025 or 2026 at significant risk as production slows amid safety checks and regulatory probes.
In addition to the 737 Max issues, Boeing has faced further challenges with its 787 Dreamliner program. A new whistleblower, Sam Salehpour, a Boeing engineer-turned-whistleblower, documented production issues with the 787 Dreamliner, leading to heightened scrutiny of the company's assembly processes at its plants in Washington and South Carolina.
The ongoing safety concerns have prompted airline partners like United and Delta to seek out new planes from other manufacturers, such as Airbus, which has benefited from Boeing's recent troubles. Nevertheless, Boeing still managed to secure 131 gross orders in Q1, with its order backlog sitting at an impressive 5,591 planes worth approximately $441 billion.
Late last month, CEO Dave Calhoun announced that he would step down at the end of this year, following a series of major safety issues that have plagued the company over the past five years. Stan Deal, Boeing's head of its commercial aircraft division, is also opting to retire. Calhoun's position became increasingly untenable after reports emerged that several major U.S. airline CEOs asked to meet with Chairman Larry Kellner to discuss safety concerns and the likely delay of scores of planes over the coming years tied to various probes into Max safety.
