Boeing is back in the red. After emerging from a six-month streak of losses in the second quarter, Boeing Co. CEO Dave Calhoun reported October 27 that the aviation manufacturer lost $132 million in the third quarter of 2021 due in part to parts issues with the company’s 787 airplane and Starliner space capsule.
The Chicago-based aerospace company made $15.278 billion in revenues last quarter with a slim operating margin of 2.2%. A significant income tax refund helped the company’s free cash flow, Calhoun said in a call with analysts, which was -$262 million.
The aviation CEO characterized Boeing as working on stability and playing the long game in a recovering market but signaled caution about the availability of supplies and labor. “Labor availability within our supply chain will be the critical watch item,” Calhoun said, and noted that Boeing would keep an eye on the stability of its own supply chain as it prepared to transition from demand pressure to production pressure.
Boeing’s primary headache is its 787 Dreamliner. The company stopped delivering the jets in May, and a Wall Street Journal article confirmed by Boeing reported that the company also found that a titanium part in the plane was not as strong as expected. In a call with analysts, Calhoun estimated the total impact of the 787 difficulties would be about $1 billion and noted the program margin is still roughly breakeven as it produces two planes a month.
Calhoun compared the FAA’s thorough inspection process to its inspection of the 737 MAX and said the company was “well past halfway” working through the part problem and currently making sure the plane is entirely compliant with material specifications.
“We’ve been doing rework nonstop for the last seven months. So it’s not a giant mountain ahead of us,” he said. Boeing currently has a little more than a hundred of the planes in inventory.
Boeing’s commercial airplanes division delivered 85 planes last quarter and made $4.4 billion. According to Calhoun, 62 of those airplanes were 737 MAX jets, which he reported are “flying like crazy” and “as reliable as any airplane in any fleet in the world.” He said the company expected to deliver the “vast majority” of the remaining 370 MAX jets in inventory by the end of 2023.
The company’s defense, space, and security operations saw revenue fall to $6.6 billion in the last quarter, mainly due to an issue with Boeing’s crewed space capsule. The Boeing Starliner was pulled from an expected test flight in August due to safety concerns about its thruster valves. Calhoun said the unexpected error has pushed test flights back to 2022 and cost the company $185 million.