Sun. May 29th, 2022

Boeing has announced a $ 3.5 billion pre-tax levy for its Dreamliner 787 program, bringing the expected cost of delays for the wide-body passenger plane to $ 5.5 billion.

Dreamliner production caused headaches for the aircraft manufacturer, which halted deliveries of the aircraft for the second time in May after numerous manufacturing defects were discovered by the company and investigated by U.S. regulators.

Boeing has also increased the amount of abnormal production costs associated with the Dreamliner from about $ 1 billion to $ 2 billion by the end of 2023.

The financial cost “has significantly affected our earnings”, CEO Dave Calhoun wrote in a message to employees on Wednesday when the company announced results for the most recent quarter.

The $ 3.5 billion cost was mainly due to estimated customer compensation for longer delivery delays, chief financial officer Brian West told investors. The $ 2 billion in abnormal costs stems from lower production rates that last for longer and higher costs to repair aircraft.

The 787 Dreamliner is “manufactured at a very low rate and will continue to do so until deliveries resume,” Boeing said. The return to the production of five of the aircraft per month, the rate at which it produced them until July 2021, will be “gradual”.

American Airlines expects its first 787 delivery in mid-April, a timeline that has not changed in recent months, said Derek Kerr, the airline’s chief financial officer, during the US airline’s earnings call on January 20.

But while the U.S.’s largest airline was expecting all 13 of its 2022 Dreamliner deliveries this summer, it has since revised that number to four. “If there are further delays and it really affects the summer a lot more” than is currently expected, Kerr said, Boeing has promised to compensate for the additional losses.

The aviation giant showed a net loss of $ 4.2 billion in the fourth quarter, compared to a loss of $ 132 million in the previous quarter, on revenue of $ 14.79 billion, which lacks analysts’ revenue expectations of $ 16.5 billion. The adjusted quarterly loss per share was $ 7.69. The company said its cash flow was positive for the first time since 2019 – reaching $ 700 million.

For the full year 2021, Boeing reported a loss of $ 4.29 billion in revenue of $ 62.29 billion, with an adjusted share loss of $ 9.44 and operating cash flow of minus $ 3.4 billion.

Boeing said it would resume deliveries in China of the 737 Max aircraft as early as the first quarter, pending final approval from Chinese regulators and airlines. The aircraft was grounded after two fatal accidents in 2018 and 2019. Production is up to 26 aircraft per month, and that rate is on track to increase to 31 per month early this year.

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