June 23, 2024

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Epicurean computer & technology

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Employees work on the Boeing 777 assembly line
Employees work on the Boeing 777 assembly line © Getty Images

Boeing took a $1.2bn hit in the first quarter because of the war in Ukraine and charges within its defence, space and security segment stemming from its Air Force One programme.

An additional charge of $1.5bn is expected within its commercial division beginning in the current quarter.

The aerospace giant recorded a $212mn pre-tax charge due to the war, which is creating “near-term challenges,” while fixed-term programmes in its defence business logged over $1bn in charges.

There was a $660mn charge related to the production of Air Force One, the US presidential aeroplane, driven by higher supplier costs, higher costs to finalise technical requirements, and schedule delays.

Its T-7A Red Hawk programme, a military pilot training system, incurred a $367mn charge mostly because of supply chain constraints, Covid-19, and inflationary pressures as Boeing negotiates with suppliers.

The Chicago-based company reported a net loss of $1.24bn in the first quarter on revenue of $14bn, which translated to a loss per share of $2.06. Its net loss in the same period last year was $561mn.

“We still have more work to do,” Dave Calhoun, chief executive, said in a message to employees. He expected Boeing to generate positive operating cash flow for the full year, though cash flow was negative $3.2bn in the first quarter.

Boeing forecast a further $1.5bn in abnormal costs related to its wide-body 777 programme that will begin to hit in the June quarter due to a pause in production on the 777-9 during 2023. The timeline of first delivery has been delayed to 2025.

Boeing has suspended engineering support, flight training, parts delivery, and maintenance support for Russian customers, and has halted Russian titanium sources.

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