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Shares fell 4% before the bell as cost overruns in Boeing's
defense, space and security segment have hobbled a recovery for
the company attempting to come out of successive crises by
cashing in on rising air travel demand.
Both Boeing and its European rival Airbus SE have ramped up
production of narrowbody jets, with Boeing delivering 112 jets
in the third quarter compared to 85 jets last year.
That helped it generate a free cash flow of $2.9 billion in the
quarter. It had recorded a cash burn of $507 million in the same
period a year ago.
However, rising cost pressures over the last few months have
hampered fixed-price contracts for U.S. aerospace and defense
firms, prompting an industry body to ask the U.S. Congress for
inflationary relief.
"Our revenue and earnings were significantly impacted by losses
on fixed-price development programs in our defense business,
driven by higher estimated manufacturing and supply chain
costs," Boeing Chief Executive Dave Calhoun said in a message to
employees.
The company has appointed a senior troubleshooter Steve Parker
to help turn around loss-making programs in its defense unit,
Reuters reported on Tuesday.
On the commercial side, Boeing handed over 86 MAX jets in the
quarter, or about 29 a month, according to company data. It
needs to deliver roughly 44 jets per month in the fourth quarter
to meet its 737 MAX delivery target of "low 400s" this year.
Third-quarter revenue rose 4% to $15.96 billion, but adjusted
loss per share widened to $6.18 from $0.60 a year ago.
"We've also added more than 10,000 employees this year and are
investing in their training and development to accelerate the
experience curve and improve productivity," Calhoun said.
"Within our production facilities, we're not pushing the system
too fast," he said, underscoring the challenging environment for
the aerospace industry.
The sector is facing persistent supply shortages, particularly
of workers and castings, though General Electric Co said on
Tuesday it was seeing early signs of some supply challenges
easing.
(Reporting by Abhijith Ganapavaram in Bengaluru and Rajesh Kumar
Singh in Chicago; Editing by Arun Koyyur)
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