Yahoo Finance Shocked investors wipe $9bn off crisis-hit Boeing
Almost $9bn (£7.1bn) was wiped off the value of Boeing after it warned it will burn through cash this year and grapple with further delays to deliveries of its new plane.
Brian West, chief financial officer, said he expected cash flow to be negative during 2024, largely owing to delayed deliveries of the 737 Max model as Boeing slows production after a door plug blew out of an Alaska Airlines jet in January.
The update came as a shock to investors, causing shares to fall 7.6pc, or by $8.6bn, on Thursday night, to close at $172.21. It means the New York-listed company has lost almost a third of its value this year.
It comes just two months after Boeing said it expected to be cash generative for the year in the region of the low single-digit billions.
Mr West, who was speaking at a conference in New York, also said there will be no increase in airliner deliveries this quarter compared with the first three months of the year.
He admitted Boeing’s customers had been left “frustrated and disappointed” by the production issues. “If you’re on the inside, you’re seeing progress,” he added, while adding that “everyone wishes it would go faster.”
Boeing deliveries have slumped after the Federal Aviation Administration capped 737 Max build rates at 38 jets a month in response to the Alaskan Airlines incident. The company has since reduced output to well below that level as it seeks to iron out production errors and regulators continue to investigate its processes.
Mr West said on Thursday that cash consumption this quarter may be “a little worse” than the $3.9bn that Boeing burned through the first quarter, despite predicting last month that this number would improve.
He added that savings could be made during the second half of the year to reduce cash outflow, but admitted “it might not make it all up.” Mr West added: “The payoff, if we do this right, will be big beyond 2025, and that is what we’re aiming at.”
Mr West said it is continuing to have takeover talks with Spirit AeroSystems, which supplies the Max fuselage, including the panel that blew out of the Alaska jet, which would give Boeing greater oversight of jet production
He said a deal for Spirit, spun off by Boeing in 2005, remained possible but that negotiations are complex. Spirit also supplies rival planemaker Airbus, with its Belfast plant making the wings for the European manufacturer’s A220 plane.
