Boeing 787 problems result in $4 billion loss
Boeing announced a $4.16 billion loss in the fourth quarter as the financial fallout from production defects in one of its best-selling planes, the 787 Dreamliner, worsened.
The aircraft manufacturer has paid $3.5 billion to cover further delays in delivering copies of its 787 jetliner and compensation for airlines still waiting to receive their planes.
The company said 787 manufacturing issues would add $2 billion in unusual production costs, double an earlier projection.
Boeing has just completed a year in which aircraft sales rebounded from a recession caused by the grounding of its 737 Max jetliner and a pandemic that crippled air travel. The Chicago-based company again finished far behind European rival Airbus in delivering new planes last year, partly because of the 787.
The twin-aisle 787 was grounded for more than three months in 2013 by overheating lithium-ion batteries. After design changes, the plane became a hit with airlines, who liked its fuel economy on long flights, and travelers, who liked the larger windows and more comfortable cabin.
In May 2021, however, Boeing halted deliveries of new 787s due to production defects, including gaps in the junction of the carbon composite fuselage panels. Boeing was unable to offer a fix satisfactory to the Federal Aviation Administration.
Boeing’s inability to resume deliveries is causing headaches for airline customers. Without the 787s it expected to receive now, American Airlines has dropped some international flights scheduled for next summer. US officials say Boeing has agreed to pay penalties for missed deadlines, and they say there could be negotiations over additional compensation if the delays last much longer.
The 787 saga unfolds just as Boeing is trying to surpass the grim first record of the 737 Max, which was grounded around the world for nearly two years after two crashes that killed 346 people in all. Following an FAA-approved redesign, Boeing delivered 245 Max jets last year, providing much-needed cash.
Separately, Boeing wrote off $402 million for a tanker it manufactures for the US Air Force. The accusation resulted in a loss for Boeing’s usually dependable defense and space business.
Boeing’s loss in the fourth quarter compared to an $8.44 billion loss in the same period a year earlier, when airlines had little appetite for new planes.
Excluding one-time charges, Boeing would have lost $7.69 per share — far worse than Wall Street expectations for a loss of 36 cents per share, according to a FactSet survey.
Revenue was $14.16 billion, down 3% from a year ago, also below analyst forecasts of $16.54 billion.
CEO David Calhoun called 2021 a year of rebuilding and said in a note to staff that Boeing is “well positioned to accelerate our progress in 2022 and beyond.” He said the airline industry’s recovery from the pandemic has boosted demand for new planes, and he expressed optimism about the 787’s long-term prospects.