Boeing reported Wednesday that it lost $561 million in the first quarter on revenue of $15.2 billion, results largely in line with market expectations, though it burned through cash at a higher than expected rate of $41 million per day.
In the first three months of the year, demand for commercial jets was depressed from the COVID-19 pandemic. And due to a manufacturing problem, Boeing managed to deliver late in the quarter just two 787 Dreamliners, one of the planes that some airlines still want to take.
However, Boeing chief executive Dave Calhoun told employees in a message Wednesday morning that the company has taken "important strides" toward transforming the business to adapt to the realities of the downturn.
He said the pause of almost five months in 787 deliveries "was the right thing to do and is another demonstration of our unrelenting focus on quality."
And he offered optimism for the course ahead: "We view 2021 as a key inflection point for our industry as vaccine distribution accelerates," he said.
The quarterly results were improved by 63 deliveries of the 737 MAX and by revenue from the Defense Department ordering 27 more KC-46 air-to-air refueling tankers.
Discovery of an electrical problem on the 737 MAX this month forced the grounding of those jets and slowed deliveries, but that new issue didn't affect the first quarter financial results. And Calhoun said Boeing is "finalizing the plans and documentation with the FAA" for a relatively quick fix that will allow airlines to return their airplanes to service.
"Upon approval by the FAA, we expect the work to take a few days per airplane," he said.
The major hit in the first quarter beyond the lower production rates from the pandemic was the lack of 787 deliveries until late March. This was due to the discovery of a manufacturing quality issue at the joins of the fuselage sections.
Boeing also recorded a $318 million accounting charge on the Air Force One program, "largely due to COVID-19 impacts and performance issues at a key supplier."
Peter McNally, financial analyst at Third Bridge Group in New York said Wednesday that "while Boeing delivered overall revenues that were generally in line with consensus expectations, the company came up short in a few key areas."
"Cash flow failed to meet expectations while liquidity fell and debt remained high," he said.
Boeing's revenue for the quarter was down from $16.9 billion a year ago.
The quarterly loss of 92 cents per share compared to a loss in the first quarter of 2020 of $1.11 per share. Last year, jet production was stopped in March as Boeing closed its factories in response to the pandemic outbreak.
Boeing reported free cash flow — defined as cash from operations minus capital expenditures for property, plant and equipment — of negative $3.4 billion for the quarter.
Boeing's cash on hand at quarter end fell $3.7 billion to $21.9 billion. The company's net debt increased by nearly $4 billion since last quarter to $41.7 billion.
Rob Stallard, financial analyst with Vertical Research Partners, said in a note to investors that while these first quarter results "are clearly not good on both an absolute and relative basis, this should have been widely expected by investors."
