In the third quarter, The Boeing Company [NYSE: BA] reported revenue of $18.1 billion. However, it experienced a $2.70 loss per share on a GAAP basis and a $3.26 loss per share on a core basis (non-GAAP). The OEM attributed the results to underperforming defense projects and a decrease in 737 deliveries.
- Boeing reaffirmed guidance: $4.5-$6.5 billion of operating cash flow and $3.0-$5.0 billion of free cash flow (non-GAAP)
- Expects to deliver from 70 to 80 B787 and now expects to deliver from 375 to 400 B737 airplanes
- Transitioning 787 to five per month
- Plan to complete 737 production transition to 38 per month by year-end.
- Revenue of $18.1 billion reflecting 105 commercial deliveries
- Total company backlog of $469 billion, including over 5,100 commercial airplanes
Comments from Boeing CEO
“We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term,” said Dave Calhoun, Boeing president and chief executive officer. “We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand. The important work we’re doing to add rigor around our quality systems and build a culture of transparently bringing forward any issue, no matter the size, can bring short-term challenges – but it is how we set ourselves on the right course for our long-term future. Leading with safety, quality and transparency, we will continue to restore our operational and financial strength.”
Boeing Financial Tables
| Table 1. Summary Financial Results | Third Quarter | Nine Months | |||||||||||||||||||||||||||||||||||||
| (Dollars in Millions, except per share data) | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||||||||||||||||||||||||||||||
| Revenues | $18,104 | $15,956 | 13 % | $55,776 | $46,628 | 20 % | |||||||||||||||||||||||||||||||||
| ~GAAP~ | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | ($808) | ($2,792) | NM | ($1,056) | ($3,174) | NM | |||||||||||||||||||||||||||||||||
| Operating margins | (4.5) | % | (17.5) | % | NM | (1.9) | % | (6.8) | % | NM | |||||||||||||||||||||||||||||
| Net loss | ($1,638) | ($3,308) | NM | ($2,212) | ($4,390) | NM | |||||||||||||||||||||||||||||||||
| Loss per share | ($2.70) | ($5.49) | NM | ($3.64) | ($7.24) | NM | |||||||||||||||||||||||||||||||||
| Operating cash flow | $22 | $3,190 | NM | $2,579 | $55 | NM | |||||||||||||||||||||||||||||||||
| ~Non-GAAP*~ | |||||||||||||||||||||||||||||||||||||||
| Core operating loss | ($1,089) | ($3,071) | NM | ($1,919) | ($4,020) | NM | |||||||||||||||||||||||||||||||||
| Core operating margins | (6.0) | % | (19.2) | % | NM | (3.4) | % | (8.6) | % | NM | |||||||||||||||||||||||||||||
| Core loss per share | ($3.26) | ($6.18) | NM | ($5.35) | ($9.31) | NM |
| Table 2. Cash Flow | Third Quarter | Nine Months | ||||||||||||||||||||||||||||
| (Millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
| Operating cash flow | $22 | $3,190 | $2,579 | $55 | ||||||||||||||||||||||||||
| Less additions to property, plant & equipment | ($332) | ($284) | ($1,096) | ($896) | ||||||||||||||||||||||||||
| Free cash flow* | ($310) | $2,906 | $1,483 | ($841) |
| *Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.” |
Operating cash flow was $0.0 billion in the quarter, reflecting less favorable receipt timing, including the absence of a prior year tax refund (Table 2).
| Table 3. Cash, Marketable Securities and Debt Balances | Quarter End | |||||||||||||
| (Billions) | Q3 23 | Q2 23 | ||||||||||||
| Cash | $6.8 | $7.3 | ||||||||||||
| Marketable securities1 | $6.6 | $6.5 | ||||||||||||
| Total | $13.4 | $13.8 | ||||||||||||
| Consolidated debt | $52.3 | $52.3 |
| 1 Marketable securities consist primarily of time deposits due within one year classified as “short-term investments.” |
Cash and investments in marketable securities totaled $13.4 billion, compared to $13.8 billion at the beginning of the quarter (Table 3). The company has access to credit facilities of $10.0 billion, which remain undrawn.
The total company backlog at quarter end was $469 billion.
Commercial Airplanes
| Table 4. Commercial Airplanes | Third Quarter | Nine Months | ||||||||||||||||||||||||||||||||||||
| (Dollars in Millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||||||||||||||||
| Deliveries | 105 | 112 | (6) % | 371 | 328 | 13 % | ||||||||||||||||||||||||||||||||
| Revenues | $7,876 | $6,303 | 25 % | $23,420 | $16,755 | 40 % | ||||||||||||||||||||||||||||||||
| Loss from operations | ($678) | ($622) | NM | ($1,676) | ($1,738) | NM | ||||||||||||||||||||||||||||||||
| Operating margins | (8.6) | % | (9.9) | % | NM | (7.2) | % | (10.4) | % | NM |
Impact of 737 Aft Pressure Bulkhead Non-Conformance
In the third quarter, Boeing’s Commercial Airplanes division experienced a rise in revenue, reaching $7.9 billion. Higher deliveries of the 787 aircraft primarily drove this increase. However, the operating margin stood at (8.6) percent, mainly due to lower deliveries of the 737 planes and additional costs related to research and development.
During this period, Boeing discovered that certain 737 airplanes had a non-conformance issue with the aft pressure bulkhead section, which was identified among the suppliers. Although Boeing states this fault does not pose an immediate safety concern for in-service planes, it requires inspections and rework. This impacted near-term deliveries and production. Consequently, Boeing now anticipates delivering 375-400 airplanes this year. While suppliers remain committed to planned rate increases, the final assembly transition to 38 planes per month is expected to be completed by the end of this year. Boeing plans to further increase the rate to 50 per month between 2025 and 2026. The associated costs for performing the necessary rework are considered insignificant. Boeing has factored them into the results for the third quarter.
As for the 787 program, production is currently increasing to a production rate of five planes per month. Boeing plans to increase the rate to 10 per month between 2025 and 2026. Despite the ongoing transition, the program still aims to deliver 70-80 airplanes by the end of this year.
Notably, during the quarter, Commercial Airplanes secured 398 net orders, including significant orders from Ryanair for 150 737 MAX 10 airplanes, United Airlines for 50 787 planes, and Saudi Arabian Airlines for 39 787 planes. Additionally, Commercial Airplanes successfully delivered 105 airplanes while maintaining a backlog of over 5,100 airplanes valued at $392 billion.