Boeing posts Q2 loss

US airplane manufacturer Boeing announced this week that its second quarter loss was lower than expected at US$234 million

28th Jul 2016


Boeing posts Q2 loss

US airplane manufacturer Boeing announced this week that its second quarter loss was lower than expected at US$234 million compared to a net profit of US$1.1 billion last year. The loss was expected because Boeing warned last week it planned to take a US$3 billion charge related to its 787, 747 and KC-46 tanker aircraft programmes.

 

Analysts said Boeing produced more aircraft at higher operating profit margins, Reuters reported, and also predicted that Boeing’s margins should stay firm in the second half of the year. Boeing shares rose 3 percent in early trading following the earnings report, but they eased and were up 1.2 percent at $136.46 on the New York Stock Exchange.

 

Boeing said its decision to slow down payments to suppliers this year was an important strategic move to align its payment processes with industry standards. "This is not a one-time event or implementation," chief executive officer Dennis Muilenburg said on a conference call. "We see this as a key element of our longer-term cash growth plan and consistent with our plans for the business to grow cash year over year."

 

Muilenburg also said Boeing would rather curb production than cut prices for twin-aisle aircraft to deal with slowing demand. The company "clearly has work to do" to sell 40 of its 777s this year, having only sold eight so far, he said. "If those orders don't materialize, we're going to keep a close eye on our production plans and make sure supply and demand remain in balance," he said.

 

Q2 revenue for the company’s Commercial Airplanes division rose 3 percent to US$17.5 billion. Second-quarter operating margin was a negative 5.6 percent, “reflecting previously announced R&D reclassification of US$1.2 billion on the 787 programme, a pre-tax charge of US$1.1 billion on the 747 programme, and a pre-tax charge of US$354 million on the KC-46 Tanker programme,” Boeing said in a statement.

 

During the quarter, the 787 programme reached a 12 per month delivery rate and the company opened the new 777X composite wing centre in Everett, Washington. The 737 programme rolled out the first two 737 MAX production airplanes and has received over 3,200 orders for the 737 MAX since launch, Boeing said. The division booked 152 net orders during the quarter and the division’s backlog remains strong with nearly 5,700 airplanes valued at US$417 billion in the pipeline.

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