(Reuters) – Boeing said on Wednesday it would spend more cash than expected in the first quarter and pushed back one of the company’s cash flow targets as production of the 737 is needed to be cut. to improve its quality, while the crisis worsens at the American aircraft manufacturer.
Chief Financial Officer Brian West said the planemaker would produce fewer than 38 Boeing 737s per month, the maximum imposed by the Federal Aviation Administration (FAA) limit.
The company’s stock was down 1% before market close.
“We’re deliberately slowing down to get it right,” Brian West said at a Bank of America conference. “It was we who made the decision to limit the pace of the 737 program (…) And we will feel the impact over the coming months.”
The manufacturing quality of Boeing and its supplier Spirit AeroSystems has been closely scrutinized since the incident on January 5, during which an element of the fuselage of a 737 MAX 9 tore off in mid-flight. The two companies have started negotiations with a view to a merger.
Brian West added that Boeing’s first-quarter cash loss will be between $4 billion and $4.5 billion, “higher than we initially anticipated.” in January”.
This loss follows a combination of lower delivery and production volume in the commercial division, and pressure on working capital.
It will also take longer for Boeing to reach its 2022 target of around $10 billion in annual cash flow by 2025 or 2026.
“It will take us longer than expected to get to our goal,” Brian West said, without giving further details. “But we believe the steps we are taking now position us better for the long term.”
Brian West said the commercial aircraft division’s margins would be “closer to -20%” in the first quarter, in part due to compensation given to customers for delivery delays. They will improve throughout the year, but will remain negative overall in 2024, he added.
The CFO indicated that in the future, Boeing would only accept deliveries of fully compliant fuselages from Spirit. The Spirit company is currently assembling the 737 fuselage before shipping it to Boeing’s factory in Washington state for completion.
The panel that came loose from the 737 MAX 9 plane was missing four critical bolts, according to a preliminary report from U.S. investigators.
“For years we have prioritized the plane’s journey through the factory over a job well done, and that needs to change,” said Brian West.
On the possibility of a Spirit buyout, Brian West said Boeing could finance such an operation through a mix of cash and debt, without having to touch the shares.
(Reporting Abhijith Ganaparavam in Bangalore and Allison Lampert in Montreal; French version Mathias de Rozario; editing by Kate Entringer)
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