Boeing Co. on Wednesday posted its first quarterly profit in almost two years, as deliveries of its best-selling 737 Max jets to airlines gained traction amid a sharp rebound in travel bookings after an increase in global COVID-19 vaccinations.
The 737 Max is integral to Boeing’s financial recovery, as the U.S. plane maker scrambles to recoup billions of dollars in lost sales from the pandemic, push past the safety scandal caused by two fatal 737 Max crashes, and deal with structural defects of its bigger, more profitable 787 planes.
Boeing shares were up 5 per cent at US$233 in midday trading after the results, which were also fuelled by higher defence and services sales. Shares finished the day up 4 per cent Wednesday at US$231.
Chief executive officer David Calhoun said in a message to employees the company now plans to keep staffing levels stable at around 140,000 employees, after previously targeting a reduction to 130,000 by the end of 2021.
Mr. Calhoun told investors on the company’s earnings conference call, “The U.S. domestic market is showing remarkable recovery.” But he cautioned Boeing’s recovery faces threats such as a longer-off return of international travel, COVID-19 variants and a labour shortage in its sprawling supply chain.
“We anticipate a multiyear recovery,” Mr. Calhoun added.
Boeing’s 737 Max remains grounded in China, where trade tensions between Washington and Beijing have stunted sales, and it faces tougher regulatory scrutiny and weak demand for its delayed 777X mini-jumbo.
The company is also working through costly repairs and forensic inspections to fix production-related defects on its 787 program.
It reiterated plans to cut 787 production to an unspecified rate lower than 5 jets per month after finding a new problem, first reported by Reuters, and to deliver fewer than half of the lingering 100 or so 787 Dreamliners in its inventory this year – instead of the “vast majority” it had expected.
Asked whether Boeing has an execution problem on manufacturing given persistent issues on the 787 and other aircraft programs, Mr. Calhoun told CNBC: “This is Boeing being tough on Boeing. We started the inspection process, nose to tail.”
Mr. Calhoun added that he would start to worry about impacts on production owing to a jet order drought from Chinese buyers around the “middle of next year.”
Boeing said it has delivered more than 130 737 Maxs since a safety ban on that jet was lifted in November, 2020, and that it was building 16 737 Max jets per month at its Seattle-area factory. It aims to increase output to 31 per month by early 2022.
“Defence markets are strong and they’re successfully conserving cash,” said Teal Group analyst Richard Aboulafia. “Much depends on the angle of the commercial recovery.”
Looking to build momentum, Boeing is preparing to launch its delayed CST-100 Starliner astronaut capsule to the International Space Station on Friday in a crucial do-over test after a near “catastrophic failure” during its 2019 debut.
Mr. Calhoun said he is “optimistic, confident” about Friday’s launch after software flaws and NASA reviews sidelined its Starliner for 18 months, and about Boeing’s ability to compete against newer space players such as billionaire entrepreneur Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin.
Boeing’s core operating profit was US$755-million in the second quarter, compared with a loss of US$3.32-billion a year earlier.
Revenue rose 44 per cent to about US$17-billion.
Analysts had on average expected Boeing to report a quarterly loss of US$454.8-million on revenue of US$16.54-billion, IBES data from Refinitiv showed.
Boeing’s commercial airplanes division, its traditional profit powerhouse, reported a quarterly loss of US$472-million, but its defence business earned US$958-million and its services division took in US$531-million.
Boeing still expects to turn cash flow positive in 2022.
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