Boeing (BA) 2Q 2022 earnings are lower than estimates

Boeing stuck to its forecast on Wednesday to return to free cash flow this year as it prepares to resume deliveries of its 787 Dreamliner planes after production failures halted deliveries for much of the past two years.

The company’s results for the second quarter fell short of analysts’ estimates. Weakness in the defense unit dragged down the results, but was partially offset by strength in the commercial aircraft unit. Aircraft deliveries rose to 1[ads1]21 in the second quarter from 79 a year ago, while commercial aircraft revenue rose 3% to more than $6.2 billion.

The company is fresh from winning high-profile orders at the Farnborough Airshow in the UK such as those for 100 737 Max 10s from Delta Air Lines. Customers of Boeing and rival Airbus have benefited from a boom in travel after demand for air travel fell during the Covid pandemic.

Here’s how the company performed compared to analyst estimates tracked by Refinitiv:

• Adjusted loss per share: 37 cents against an expected loss of 14 cents.
• Income: 16.68 billion dollars against the expected 17.57 billion dollars.

Boeing swung to an operating cash flow of $81 million in the quarter after burning through $483 million in the same period last year. The Arlington, Virginia-based company posted net income of $160 million, down 72% from a year earlier on revenue of $16.68 billion, which was down 2% from the second quarter of 2021.

CEO Dave Calhoun said earlier this month that the company produces an average of 31,737 Max jets each month. He said Boeing will not ramp up production too quickly because of supply chain and labor constraints. Rival Airbus has expressed similar concerns.

“Even with high demand, we will not chase production rates or push our system too quickly,” Calhoun said in a staff memo Wednesday. “With safety and quality at the fore, we will prioritize stability and predictability.”

He also reiterated that Boeing is “in the final stages” of preparations to resume deliveries of its wide-body 787 Dreamliners, which have been on hold for more than a year due to production failures.

In January, Boeing said the issues would cost it $5.5 billion, including $2 billion in irregular production costs as it scaled back production to avoid a pile of inventory. The company recorded $283 million of this in the second quarter.

A return of 787 deliveries is key for Boeing because customers pay the bulk of the aircraft price when they receive the planes.

The company’s defense unit revenue fell 10% from a year ago, and Boeing took a $147 million charge on its unmanned MQ-25 fuel tank due to higher costs.

The company also took a $93 million charge for its Starliner astronaut capsule, bringing the program’s cost overruns to $688 million to date. Boeing successfully completed the second unmanned Starliner flight test in May, and is now preparing for its first launch with astronauts next.

Boeing executives will discuss results with analysts at 10:30 a.m. ET Wednesday, when they are likely to face questions about the 737 Max’s return to flying in key airline customer China, timing of the 777X and cash flow forecast for this year and next.

Analysts are also likely to ask Boeing executives to outline when they expect to win US certification of the 737 Max 10, the largest of the Max family.

Boeing shares are down more than 22% so far this year through Tuesday’s close. The stock was up more than 1.8% in early trading Wednesday after the results were released.