July 7, 2022

Boeing is delaying its new jet as losses continue to rise

The aircraft maker announced Wednesday that it will temporarily suspend production of its 777X passenger jet, which it plans to deliver to customers by the end of 2023. Demand for long-range and long-haul passenger jets, a key feature of Boeing’s commercial jet business, continues to be affected by the weak demand for international aircraft during epidemics.

Demand for this specialty has grown significantly as a result of recent corporate scandals, including the launch of the 777X passenger jet. Boeing will continue to build both the previous passenger and cargo aircraft of its 777 jet, known as the 777 Classic. Those models are to be replaced by the 777X.

If plans for the 777X passenger jet are pushed back, a total of $ 1.5 billion in extraordinary costs to Boeing will continue until production resumes in the second quarter.

The company booked $ 1.2 billion in special fees in the first quarter, including higher supplier costs, higher costs for finalizing technical requirements and $ 660 million in delays in completing the next used jet. Air Force One aircraft. This includes $ 212 million in business-related fees Sanctions on Russia It was triggered by its invasion of Ukraine and supply chain sanctions on its Red Hawk military jet, as well as $ 367 million in fees related to Kovit-19 and inflationary pressures.

In an interview with CNBC, CEO David Calhoun said, “This is a more confusing quarter than any of us would like.

Excluding those fees, the company reported a major operating loss of $ 1.5 billion in the first quarter, which is worse than Boeing’s operating loss of $ 353 million in the first quarter of 2021. Analysts surveyed by Refinitiv have estimated a significant operating loss of just $ 399. Million per quarter.

The company’s revenue was down 8% to $ 14 billion compared to the previous year. Analysts predict $ 16 billion in revenue.

Calhoun said the company is optimistic about the 777X, despite the issues. He said the current certification process with the Federal Aviation Administration is one reason to push back aircraft production.

“We are confident in the 777 plan and our customers continue to see value in it,” he said in a note to Boeing staff. “Airline projects have been serving our market for decades, and it is important to set aside time now to sustain long-term success.”

Boeing says it has taken a significant step to restart another whiteboard jet delivery 787 Dreamliner, Discontinued from June 2021 due to quality control reasons. Boeing announced on Wednesday that it had submitted a certification plan to the FAA, which would allow deliveries to resume, although it could not estimate when that would happen.

“Everybody I want to give you a date,” Calhoun said in his CNBC interview. “I can not do that because the FAA controls that process. We are confident and comfortable and have submitted the best that Boeing can submit.”

Shares Boeing (B.A.)The Dow Jones Industrial Average fell more than 5% in early trade on Wednesday.