Boeing delays its latest aircraft as losses rise

The aircraft builder announced Wednesday that it will temporarily halt the start of production of the 777X passenger jet, which it plans to start delivering to customers by the end of 2023. The demand for long-haul and wide-body passenger aircraft, which is central to Boeing’s commercial airline business. , continues to be hurt by weak demand for international flights during the pandemic.

Demand for Boeing freighters has remained strong, so it will go ahead with the recently launched 777X freighter before it begins production of the 777X passenger plane. Boeing will continue to build both previous passenger and freighter versions of its 777 aircraft, known as the 777 Classic. Those models are scheduled to be replaced by the 777X.

Delaying plans for the 777X passenger jet will result in a total of $1.5 billion in abnormal costs for Boeing starting in the second quarter and continuing until production resumes.

The company also booked $1.2 billion in special fees in the first quarter, including $660 million in fees related to higher supplier costs, higher costs for finishing technical requirements and scheduling delays to complete aircraft that will be used the next day. Presidential planes. It also includes $212 million in business interruption fees due to Sanctions on Russia due to its invasion of Ukraine and $367 million in fees related to supply chain restrictions, Covid-19 and inflationary pressures on its Red Hawk military aircraft.

“It was a more chaotic quarter than any of us would have liked,” CEO David Calhoun said in an interview on CNBC.

Even excluding those fees, the company reported a base operating loss of $1.5 billion in the first quarter, much worse than the $353 million operating loss that Boeing recorded in the first quarter of 2021. Only $399 million in the quarter.

The company also saw revenue fall 8% to $14 billion compared to the previous year. Analysts had expected revenue to rise to $16 billion.

Calhoun said the company remains confident in the 777X, despite the problems. He said the current certification process with the Federal Aviation Administration is one reason for delaying production of the aircraft.

“We remain confident in the 777 program and our customers continue to see value,” he said in a note to Boeing employees. “Aircraft programs have served our market for several decades, and it is important that we take the time now to achieve long-term success.”

Boeing said it has taken an important step to bring back further deliveries of the widebody aircraft 787 Dreamlinerwhich has been discontinued since June 2021 due to quality control concerns. Boeing revealed Wednesday that it has submitted an approval plan to the Federal Aviation Administration (FAA) that would allow deliveries to resume, although it could not give an estimate of when that would happen.

“Everyone likes me to give you a date,” Calhoun said in his CNBC interview. “I can’t do that because the FAA is in control of this process. We are confident and relieved that we have delivered the best that Boeing has to offer.”

shares Boeing (Bachelor of)a component of the Dow Jones Industrial Average, fell more than 5% in early trading on Wednesday.