Boeing Company (BA.US) is recording an additional $4.9 billion expense, and the delivery of the 777X is postponed to 2027.

The Boeing Company (BA.US) announced a $4.9 billion accounting charge and delayed the first delivery of its 777X jetliner - a reminder that, despite rising aircraft deliveries boosting cash, the recovery of the American aircraft manufacturer is still a long road ahead. This non-cash impairment charge overshadowed the third-quarter earnings report, which showed that Boeing Company posted a loss of $7.47 per share in the third quarter, worse than analysts' expectations of a loss of $4.44 per share; revenue was $23.27 billion, higher than the market's average expectation of $22.3 billion. So far, Boeing Company has accumulated nearly $16 billion in charges for the 777X project. This strategically important aircraft, delayed by seven years due to rigorous regulatory scrutiny, is now planned to enter operation in 2027. The latest charges show that despite a surge in orders under the Trump administration, Boeing Company's newly appointed CEO, Kelly Ortberg, still faces multiple challenges in stabilizing the company. He wrote in a memo to employees, "We are moving forward with a more confident plan and taking actions to improve performance." Boeing Company's quarterly revenue and free cash flow exceeded expectations, highlighting the steady increase in production of the 737 and 787 Dreamliner aircraft this year - a contrast to the past five years when delays and quality issues disappointed customers and weighed on finances. The company generated $238 million in free cash flow this quarter, the first time since the end of 2023; prior to the near catastrophic accident in early 2024 which caused production disruptions and senior management changes, Boeing Company was forced to raise funds last year. Analysts had originally expected the company to consume $884.1 million in cash before achieving positive cash flow in the fourth quarter. The 777X is an upgraded version of Boeing Company's popular 777 model, a key player in the market for the largest civilian aircraft, competing with the Airbus A350. Customers like Emirates (the largest customer for the 777X) and launch customer Lufthansa had to adjust their fleet modernization plans due to Boeing Company's repeated delays in delivering this giant aircraft. Industry research analyst George Ferguson stated that Boeing Company's overall recovery "remains intact, and the background of the supply chain may be improving - although you always hold your breath when saying this about Boeing Company." The unexpected improvement in cash flow reflects an increase in jet deliveries, as well as an adjustment in the timing of a $700 million payment from the US Department of Justice; this payment is on hold as a Texas judge has not yet made a ruling on a proposed settlement (allowing Boeing Company to avoid criminal charges related to two fatal 737 Max crashes). The company delivered 160 aircraft this quarter, the highest since 2018; with the 737 production rate being increased by 10% in line with regulatory agency's recent approval, delivery pace is expected to continue to accelerate. Ortberg told employees that the acceleration of factory pace has not been fully implemented yet. Later today, Ortberg and the new CFO Jay Malave will host the earnings call, where analysts will focus on the impact of the ongoing 90-day strike by factory workers in the St. Louis area on the defense sector, progress in the certification of the last two 737 Max models, and guidance on cash flow for the next two years due to the delay of the 777X. In September, Ortberg warned investors that the 777X project faced delays and bureaucratic paperwork in the final flight test phase as engineers and US regulatory agencies worked on the new certification process. According to Boeing Company's opaque accounting methods, as costs have ballooned to the point where the first 500 aircraft cannot be recovered, the project is in a state of "forward loss"; any additional abnormal costs and overruns must be immediately added to expenses. Prior to the third quarter, Boeing Company had already accrued nearly $11 billion in charges for this aircraft model. Ortberg stated in the earnings release that despite the latest delay being disappointing, the aircraft continues to perform well in flight testing.