Oct. 27, 2021
Boeing Reports Larger-Than-Expected Loss; Records Starliner, 787 Dreamliner Charges
In the latest issue for the 787, some titanium parts on Dreamliners built over the last three years are weaker than they should be, sources told The Wall Street Journal.
A prior issue was found in the forward pressure bulkhead at the front of the 787, involving the skin of the aircraft. Boeing expects to deliver fewer than half the Dreamliners in its inventory this year. That's down from an earlier estimate of nearly all its completed planes.
Boeing cut its production rate to two 787 Dreamliners per month until deliveries resume. Then it will bump up production to five per month "over time," according to its earnings release.
The aerospace company has approximately 105 Dreamliners in its inventory at the end of Q3. Boeing said the Dreamliner delivery timing will be dependent on inspections and rework, customer fleet planning and work with the regulators.
Customers are "going to take them when they want to take them. I can't jam them down anybody's throat," CEO Dave Calhoun said of the 787s during the company's earnings call.
737 Max Production Ramp Up
The once-troubled 737 Max is now flying in over 100 countries but it still remains grounded in China. Boeing expects to receive regulatory approval from Beijing by the end of the year and expects to resume deliveries to Chinese customers in Q1. Of the 370 737 Max jets it has in its inventory, Boeing said one-third of them are bound for China.
As Boeing works to ramp up deliveries, Calhoun said that "raw materials logistics and labor availability" will be "key watch items for future rate increases" as Boeing looks to move past its production ramp of 31 per month in the second half of 2022.
Boeing Starliner Struggles
Defense, space & security revenue fell 3% to $6.6 billion as Boeing recorded a $185 million charge on the Starliner capsule for NASA's commercial crew program.
Boeing is on the hook for all costs related to the Starliner's second uncrewed launch attempt. The company had already racked up $410 million in pretax charges, anticipating costs for another flight test.
The uncrewed test flight of the Starliner won't happen until the first half of 2022 as Boeing works to fix a technical issue with a valve in the reaction control system.
John Vollmer, the Starliner program manager, told reporters last week that a crewed flight won't happen until at least six months after the uncrewed test. That leaves open the possibility that a crewed test flight might not happen until 2023.
In an unusual move, NASA has shifted some astronauts that were slated to fly on the Starliner to a SpaceX Crew Dragon mission amid the delays. SpaceX launched its uncrewed test flight in May 2020 and has launched three missions since then.
Boeing Stock
Shares fell 1.5% to 206.61 in the stock market today. Boeing stock had initially risen in early trading following its earnings report. BA stock has been trending lower, moving further below its key 50-day line, according to MarketSmith analysis.
The stock's relative strength line has fallen in recent weeks, another sign of weakness. The relative strength line compares a stock's performance to that of the S&P 500.
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