Boeing slumps to £276m loss as midair blowout crisis deepens

Original source (on modern site) | Article images: [1]

Losses at Boeing's commercial aircraft division almost doubled in the first three months of the year as a safety crisis led to a slowdown in deliveries.

The US manufacturing giant handed over 83 planes to customers in the opening quarter, down from 130 a year earlier.

This drop-off led to the unit's operating losses jumping to $1.1bn (£880m) from $615m last year, as revenues fell 31pc to $4.65bn.

Across the group, operating cash outflow increased 10-fold to $3.4bn, indicating the strain Boeing is under following the January blowout of a door plug on an Alaska Airlines 737 Max plane.

In a message to staff, chief executive Dave Calhoun, who will leave this year after taking responsibility for the crisis, said the company was in a "tough moment".

However, he said that production delays are beginning to produce more predictable and stable assembly times for the 737 Max, deliveries of which have fallen below 38 a month.

That build rate is likely to be maintained through the first half at least, falling way short of the 50-plus monthly rate Boeing must achieve to hit a $10bn cash flow target by 2025-26.

Around 40 737s still require work to correct problems found with undelivered planes after Spirit AeroSystems, which supplied the door plug on the Alaska Airlines jet, alerted Boeing to problems with mis-drilled holes.

The company is "leaving no stone unturned" in its quality-control review, Mr Calhoun said, with training, work processes, factory equipment, inspection and incentives all under scrutiny.

Mr Calhoun also said Boeing is seeking to improve "employee listening" and has received more than 30,000 ideas from staff on how to improve production processes.

It comes after a whistleblower at the company told the US Senate this month that he was ignored after notifying management of manufacturing defects with the 787 Dreamliner and 777 wide-body jets, though Boeing maintains that the planes are safe.

Michael O'Leary, chief executive of Ryanair, one of Boeing's biggest customers, said separately on Thursday that he offered to visit production lines in Seattle to help encourage them through difficult times but his proposal was declined.

Following the Alaska Airlines incident, Ryanair sent extra engineers to Seattle and Spirit's production site in Wichita, Kansas, to increase oversight of production processes for its planes.

Boeing said the number of problem-free fuselage sections coming out of Spirit will ultimately determine how quickly 737 output is able to bounce back from the crisis.