Boeing Touts Turnaround Year as Embattled Aerospace Giant Cuts Costs

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a day ago

This time last year, the state of Boeing was basically an inflamed, giant pile of cash doused in jet fuel. The company, mired in too many scandals and setbacks to print, lost nearly $12 billion when all was said and done in 2024.
On Tuesday, the makings of a turnaround came into focus. In its latest earnings report, Boeing bested Wall Street expectations, slashed losses, and left behind the astronomical cash-burning furnace that ravaged its balance sheet for a few too many quarters.
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Rerouting and Regaining Altitude
A $176 million operating loss in the three months ended June 30 would not merit handing out party blowers around the boardroom table at most companies, but most companies didn't suffer $1 billion in operating losses during the same period a year earlier. Boeing reduced that gap by taking revenue to cruising altitude at $22.75 billion, 35% better than the second quarter of last year. Both figures, as well as a $433 million loss factoring in one-time items, were better than Wall Street analysts expected.
This time last year, Boeing's bottom line was hindered by a slowdown in production after a door plug on an Alaska Airlines 737 Max jet blew out in January 2024. In response, the Federal Aviation Administration imposed a production cap of 38 on the jetliner model while investigating Boeing's production standards, adding to the reputational damage from years of bad headlines about crashes, layoffs, multiple CEO resignations, a worker strike and more. A turnaround effort led by new-ish CEO Kelly Ortberg, whose first anniversary on the job is next month, has made considerable progress addressing two major concerns:
First of all, Boeing is delivering: 150 airplanes in the three months ending June 30, its best quarter since 2018 (coincidentally the last year Boeing made an annual profit). While Boeing is still subject to the production cap on 737 Max jets and has not yet sought a reprieve from the FAA, whose leader said last week the agency must look at Boeing's entire supply chain before making any adjustments, Ortberg has said the company could produce up to 47 a month.
Second, and perhaps most important, Boeing's cash burn, the amount of reserves spent to fund operations, fell to $200 million in the second quarter. In the first quarter, Boeing's cash burn was $2.3 billion, a drop in the bucket compared with the second quarter last year, when it was an eye-popping $4.3 billion.
A Timely Reminder: Boeing's not out of the woods yet, and investors made that clear on Tuesday, sending the company's shares down 4.4%. In a reminder of its past run of scandals, the second-quarter earnings were dragged down by a $445 million charge for a deal made with the Justice Department to avoid prosecution over two deadly 737 Max crashes. Boeing also revealed Tuesday that it doesn't expect certification of its Boeing 737 Max 7 and the Max 10 — the smallest and largest Max planes — until 2026, later than Ortberg had previously suggested. Boeing's defense business, which did not book any charges on its fixed-price contracts for the first half-year since 2019, is also staring down an unpleasant reminder of past troubles: A factory worker strike, similar to the one that crimped production of commercial jets last year, could hit the unit after employees voted down a new contract on Sunday.
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