Boeing Reports Expected Fourth Quarter and Full Year Loss Associated With 737 MAX, Market Shrugs
Boeing announced a fourth quarter and full year loss on Wednesday, attributable to the continued grounding of the 737 MAX. For the fourth quarter the company reported a GAAP loss of $1.79/share and a full year GAAP loss of $1.12/share on $76.6B in revenue.
Today, Boeing reported a fourth quarter and full-year loss, largely attributable to the continued grounding of the 737 MAX. For the fourth quarter, the company reported a GAAP loss of ($1.79) per share and a core non-GAAP loss of ($2.33) per share on revenue of $17.9B. The full year GAAP loss came in at ($1.12) per share or a core non-GAAP loss of ($3.47) per share on revenue of $76.6B. Boeing further reported a full-year negative operating cash flow of ($2.4B) and also stated that company held $10B in cash and marketable securities at the end of Q4 2019. The company currently has a total order backlog valued at $463B, which includes over 5.400 commercial aircraft valued at $377B. In Wednesday’s report, Boeing’s President and Chief Executive Officer, David Calhoun said,
“We recognize we have a lot of work to do. We are focused on returning the 737 MAX to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. We are committed to transparency and excellence in everything we do. Safety will underwrite every decision, every action and every step we take as we move forward. Fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process.”
During the fourth quarter, Boeing paid out $1.2B in shareholder dividends, despite financial headwinds associated with their inability to deliver finished 737 MAX airplanes. The company also reported a negative operating cash flow of ($2.2B) for the quarter, largely attributable to the 737 MAX as well as the timing of receipts and expenditures. Boeing closed Q4 with $10B in cash and equivalents, down from $10.9B at the start of the quarter. Due to increased commercial paper borrowing, the company’s debt increased from $24.7B to $27.3B during the quarter.
Boeing Commercial Airplanes reported Q4 revenue of $7.5B and a (38.1) percent decline in operating margins as a result of lower 737 deliveries and a pre-tax charge of $2.6B resulting from estimated customer concessions and considerations related to the 737 MAX. The company expects the suspension and resumption of 737 MAX production to result in approximately $4B in abnormal production costs in 2020, which will be expensed as incurred.
The fourth quarter saw the delivery of 79 aircraft from Boeing Commercial Airplanes, including 45 787 Dreamliners, as well as orders for 30 737 MAX aircraft, two 777 Freighters (for Lufthansa) and net orders for 36 787 Dreamliners. In late 2020, as previously announced, 787 production will be reduced from 14 to 12 aircraft monthly. Dreamliner production will be further reduced to 10 aircraft per month in 2021, before returning to the level of 12 per month by 2023. The first test flight of the new state-of-the art Boeing 777X took place on Saturday, January 25th, 2020 and deliveries are expected to commence in 2021.
In Afternoon trading on Wednesday, shares in Boeing (NYSE: BA) were trading 2.71% higher at $325.01/share (2:16PM EST)