Boeing Co is predicted to disclose whether or not the newest 737 MAX manufacturing drawback will derail the U.S. aircraft maker’s annual objectives for passenger jet deliveries and free money circulate when it unveils its first quarter monetary outcomes on Wednesday.
Investors are clamouring for particulars on the extent of the issue, which Boeing mentioned includes a “significant” portion of the 737 fleet the place two brackets had been improperly put in.
Analysts mentioned the manufacturing drawback isn’t a showstopper for the MAX, because it’s not a security subject and in-service jets have continued to fly. But Wall Street has acquired little info from Boeing on its plan to repair the issue and the general monetary influence.
“I’d like to have some numbers and some scale of the materiality of this, whether it affects deliveries, cash flow and all the rest,” Vertical Research Partners analyst Robert Stallard mentioned. “It’s unfortunately just one of many issues that Boeing seems to stumble into on a regular basis.”
The greatest query is whether or not Boeing will replace its 2023 monetary steerage, which requires it to ship a minimum of 400 737 MAXs and generate $3 billion to $5 billion in free money circulate this yr. Both objectives should be achievable, mentioned J.P. Morgan analyst Seth Seifman.
“Boeing gave a fairly wide range for the amount of cash flow they expect for the year, and there are a lot of levers to impact cash throughout the company,” mentioned Seifman, who mentioned it might be “surprising” if the corporate had been unable to fulfill its objective.
While it’s “more likely” that Boeing would decrease 737 MAX supply projections, the corporate has already delivered 111 MAXs in its first quarter — sometimes the slowest monetary quarter of the yr — and will meet its annual objective as long as rework might be completed rapidly, Seifman mentioned.
Investors may additionally press Boeing CEO Dave Calhoun concerning the variety of MAXs impacted by the issue, the associated fee and timeline for a repair.
Calhoun mentioned final week that Boeing won’t revise present plans to extend MAX manufacturing this summer season. However, the corporate has slowed 737 MAX deliveries, and the ensuing supply delay will take away roughly 9,000 seats from airways’ summer season schedules.
Due to a 767 gas tank flaw, Boeing can be anticipated to reveal a brand new cost on the KC-46 tanker program estimated to be lower than $500 million.
(Reporting by Valerie Insinna in Washington; Editing by Nick Zieminski)
