Boeing’s MAX safety crisis is causing it to burn more cash than expected, its finance chief said on Wednesday, meaning the U.S. planemaker will need more time to hit a key financial target for coming years. The company is trying to get control of safety issues following a Jan. 5 mid-flight panel blowout on a 737 MAX 9 aircraft that has placed it under the watchful eye of U.S. regulators—and frustrated airlines already struggling with delivery delays from both
Boeing and its rival Airbus. CFO Brian West told a Bank of America conference that Boeing’s cash burn in the first quarter will be somewhere between $4 billion and $4.5 billion, higher than they planned back in January. The order backlogs are frustrating airline executives, who have started to cut routes and are trying to acquire additional aircraft to meet demand. Michael O'Leary, CEO of key European Boeing customer Ryanair, told Reuters he is meeting with senior company executives on Wednesday in
Dublin to discuss prolonged delivery delays. Boeing declined comment on the visit. U.S. regulators have limited Boeing’s 737 production to 38 a month—but West said Boeing is producing fewer than that allowable amount, though did not elaborate. “We’re deliberately going to slow to get this right,” West told the conference. “We are the ones who made the decision to constrain rates on the 737 program...and we'll feel the impact of that over the next several months.” West said lower deliveries, lower production volumes at its commercial division and pressure on working capital is affecting free cash flow. It means Boeing will need more time to hit a goal outlined in 2022 for annual cash flow of about $10 billion by 2025 or 2026. Boeing is in talks to buy its former subsidiary Spirit, which it spun off in 2005. Any deal would be funded with a mix of cash and debt, rather than shares, West said. The deal faces a number of hurdles, as Spirit owns several plants that supply Airbus, and Boeing may need Airbus to help it untangle those ties. West added that margins at the commercial airplanes business would be “more like negative 20%” in the first quarter, as it has to compensate customers for delivery delays. Margins will improve throughout the year but will still be negative overall in 2024, he said. The CFO said that in the future Boeing would only take deliveries of fully conforming fuselages from Spirit. Spirit currently assembles the fuselage for the 737 before it is shipped to a Boeing factory in
Washington state to be completed. “For years, we prioritized the movement of the airplane through the factory over getting it done right, and that’s got to change,” West said. The panel that blew off the 737 MAX 9 jet appeared to be missing four key bolts, according to a preliminary report from U.S. investigators. Boeing shares rose 2.3 percent on Wednesday.