Fri, 14 May 2021

Boeing set to release report on groundings, financial losses

Robert Besser
02 May 2021, 21:08 GMT+10

CHICAGO, ILLINOIS: Amid a barrage of technical and financial challenges under the shadow of mounting political tensions between the United States and China, Boeing CEO Dave Calhoun is expected to unveil the U.S. aircraft manufacturer's quarterly financial results.

Calhoun will be pressed for updates on the effective re-grounding of part of the 737 MAX fleet due to electrical grounding flaws, which is expected to drag on longer than Boeing initially indicated, sources said.

Boeing is also facing certification challenges over its forthcoming 777X mini-jumbo, following forensic inspections and repairs to fix defects embedded in dozens of its advanced carbon-composites, which halted deliveries from October until March 2021.

One of Boeing's largest suppliers, engine maker General Electric, stressed on Tuesday that the aviation industry remained "challenged" and beset by volatility, pushing its stock down as much as 4.8 percent.

"Boeing has traded on expectations for vaccine distribution and air traffic recovery, both of which are coming through," Cowen analyst Cai von Rumohr wrote in a note earlier this month. "But there's risk of further 787 disruptions if international traffic recovery lags, and the pace of the 737 ramp is unclear."

On the bright side, Boeing has completed engine tests on NASA's SLS rocket, and begun production on the U.S. Air Force's new trainer jet.

Boeing is expected to report a smaller first-quarter adjusted loss of $1.16 per share, compared with $1.70 per share last year, aided by an improvement in aircraft deliveries as airline customers add flight capacity, anticipating a rebound in summer travel.

Boeing's flagship single-aisle 737 MAX, the mainstay of short-haul travel leading the recovery, also remains grounded in the rebounding China market.

The simmering geopolitical tensions between Washington and Beijing, which have continued under U.S. President Joe Biden, have also led to Boeing's continuing difficulties. Boeing sold one quarter of its aircraft annually to China before the 737 MAX grounding.

Boeing is also dealing with the upcoming departure of its well-regarded CFO Greg Smith, 54, after it decided to extend its required retirement age of 65 to 70 and allow Calhoun, 64, to stay on as CEO. Smith was the heir-apparent for the job.

As it navigates these challenges and others, Boeing has slowed its study of a potential new plane to counter the threat of Airbus' A321, which is snapping up orders in a lucrative slice of the travel market.

Highlighting Boeing's concerns over market share in one of the most important battlegrounds for the next generation of jetliners, Delta Air Lines ordered 25 A321neo aircraft last week.

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