Boeing Co on Tuesday reported a hefty fourth-quarter loss following a bruising last year, but shares rallied on hopes that early turnaround signs under a new CEO might bear fruit.
The US aviation giant reported a loss of US$3.9 billion as the company continued to experience a hit from a more than seven-week labor strike that shuttered two major assembly plants.
However, chief executive Kelly Ortberg, who joined Boeing in August last year, said the company is making progress.
Photo: AFP
Company officials said they expect to lift 737 MAX production this year and to clear out planes in inventory, improving the outlook for free cash flow later in the year.
Boeing has worked with the US Federal Aviation Administration (FAA) on “an agreed upon path for rate increases” on the 737 MAX, Ortberg told analysts.
Ortberg described a number of operational performance indicators that look at parts shortages, work performed out of sequence and other factors.
“We need to stay disciplined on maintaining a stable production system,” he said. “But early signs are encouraging.”
Boeing’s fourth-quarter loss took the company’s full-year loss — its sixth in a row — to US$11.8 billion. The 31 percent drop in fourth-quarter revenue to US$15.2 billion reflected a hit from fewer plane deliveries, which came in at barely a third of the level in the previous year as the labor stoppage halted output on the 737 MAX and the 777. Boeing’s performance was also marred by a troubled flight in January last year in which a 737 MAX flown by Alaska Airlines made an emergency landing after the plane suffered a mid-flight blowout on a window panel.
Boeing has also continued to suffer from legacy fixed-cost defense contracts that have led to losses for the company.
Ortberg told CNBC that Boeing is “actually a little ahead of where I expected” in terms of ramping up production on the 737 MAX following the strike and intensified process control checks after the Alaska Airlines incident.
Boeing has been producing the MAX at under the 38 per month authorized by the FAA. Analysts view the restoration of output to 38 per month and subsequent production increases as critical to Boeing’s profit outlook.
Ortberg expressed confidence in achieving higher MAX output, telling CNBC “I expect by the second half of the year, we’ll have that approval, and we’ll be moving to a higher production rate.”
Shares of Boeing finished up 1.5 percent.
“It seems investors are focusing on the improvements on the production front and focusing less on the financial results,” Briefing.com said. “We also think investors are looking a few quarters ahead on the hopes of a turnaround.”
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal