Boeing knocks out a profit for the first time since 2019
Boeing reported its first quarterly profit since 2019 and its revenue topped expectations as the giant aircraft maker tries to dig out from the most difficult stretch in its history.
Boeing earned $567 million in the second quarter, compared with a $2.4 billion loss a year ago.
Industry analysts had expected a sizeable loss. Boeing Co. shares ended regular trading up 4% on Wednesday.
The return of the troubled 737 Max jet after two deadly crashes is key to Boeing’s rebound. The company delivered 79 commercial planes in the quarter — including 47 Maxes — compared with 20 a year earlier. Deliveries are an important source of cash for Boeing because that’s when airlines usually pay the bulk of the price for a new plane.
Still, Boeing’s core commercial-planes business lost money. That was offset, however, by profits in its defense and space unit and its services division.
Boeing cut thousands of jobs over the past year and a half as it dealt with the grounding of its 737 Max airliner and the pandemic, which cut airlines’ demand for new planes. Boeing planned to reduce its workforce to 130,000 from 161,000 at the end of 2019. However, CEO David Calhoun said in a memo to employees Wednesday that the business is stabilizing and the company now plans to stop cutting and keep jobs at the current level of about 140,000.
There are, however, hurdles in Boeing’s path to recovery.
While the company is finally working off its inventory of Max jets, it has twice halted deliveries of another another plane, the larger 787, because of production flaws in the fuselage and near the nose. The company has cut the production rate for new 787s to deal with those issues.
The good news, Calhoun said, is that the interruption in 787 deliveries is happening while demand for so-called widebody jets is weak because the pandemic has crushed long-haul international flying.
“Customers are not knocking down our door to get those airplanes in light of the COVID impact on international traffic,” he said on a call with analysts.
Tension between the U.S. and China is also weighing on Boeing because China is holding up approval for its airlines to resume using about 100 Max jets. Most other major countries approved changes Boeing made to the plane after the crashes, which killed 346 people and led to a 20-month worldwide grounding.
Calhoun predicted China would let Max jets fly by year end. He said technical issues are being resolved, and China will need the planes to handle rising domestic travel and accommodate visitors to next year’s Winter Olympics in Beijing.
Calhoun said if China doesn’t act by year end, Boeing will be forced to reconsider current plans to increase Max production from 16 planes a month to 31.
Boeing’s next airliner, the 777X, is running far behind schedule as it faces a tougher review process that grew out of criticism of the Federal Aviation Administration’s initial approval of the Max.
And Boeing’s space business faces a key moment Friday, when its reusable Starliner crew capsule is scheduled to make an unmanned orbital test flight 19 months after a mission to the International Space Station failed.
But for now, the Chicago company is celebrating a profit. It said that adjusted second-quarter core profit, which excludes certain unusual items, was 40 cents per share. Wall Street had been projecting a loss of 65 cents per share, according to a survey by Zacks Investment Research.
It was Boeing’s first profit since the third quarter of 2019. Since then, Boeing had reported losses totaling $13.5 billion.
The commercial airplanes business had an operating loss of $472 million, down from a loss of nearly $2.8 billion a year ago. The defense and space business earned $958 million, and the services unit made $531 million.
Second-quarter revenue was $17 billion, which eclipsed analysts’ forecast of $16.6 billion, according to a survey by FactSet.
Boeing is struggling to recover from the grounding of the Max, which lasted from March 2019 until late last year, and then the pandemic. The company has been boosted by big orders in recent months — most notably, United Airlines ordered 200 Max jets.