Boeing (BA, Financial) experienced a slight uptick in its stock price today after releasing its first-quarter earnings report. Despite posting a loss, the aerospace giant's financial shortfall was less severe than anticipated. This marks Boeing's second consecutive quarter of earnings per share (EPS) outperforming expectations, a welcome change after a series of previous misses. However, the company saw a 7.5% year-over-year decline in revenue, totaling $16.57 billion.
Notably, Boeing refrained from providing full-year operating cash flow and free cash flow guidance for the second consecutive quarter. In the wake of the 737-9 grounding, the company opted against issuing guidance, choosing instead to focus on resolving the door issue in collaboration with regulators. This cautious approach comes amidst Boeing's first revenue drop in six quarters, primarily attributed to a 31% decrease in its Commercial Airplanes segment revenue to $4.65 billion. The downturn reflects a deliberate slowdown in 737 production to enhance quality, amidst broader safety concerns, including a notable door incident with Alaskan Airlines.
Additionally, Boeing is adjusting its production strategies across various programs:
- For the 737, production will remain below 38 units per month but is expected to return to 38 in the second half of 2024.
- The 787 program will see a temporary production slowdown, with plans to ramp up to 5 units per month later this year and aiming for 10 units per month by 2026.
- As for the 777X program, Boeing anticipates the first delivery in 2025, as it progresses with FAA certification flight testing.
The market reaction to Boeing's earnings report was muted. While the EPS beat was positively received, the absence of forward-looking guidance and the decision to reduce 737 and 787 production rates have tempered investor enthusiasm. The company's commitment to enhancing safety and production quality is clear, yet investor sentiment remains cautious. Market watchers are also keenly awaiting the announcement of Boeing's next CEO, with many hoping for an external candidate to bring fresh perspectives to the company.
