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Boeing rejected its usual financial guidance for next year and vowed to focus on the safety and quality of its operations, as the US planemaker tries to stem the fallout from a mid-air explosion on one of its jets 737 Max 9 earlier this month.
Chief Executive Dave Calhoun wrote in a memo to employees Wednesday that “now is not the time” to share financial or operational goals as executives prepare to publicly address investors for the first time since part of a fuselage exploded during an Alaska Airlines flight on January 5.
The Max issue was overshadowing Boeing’s latest quarterly earnings results, which were better than expected. The company did not provide any estimate of the financial damage resulting from the accident and the subsequent grounding of potentially affected planes.
It also did not disclose the impact of the growth limit on the production rate of its 737 Max recently imposed by the Federal Aviation Administration, the US aviation regulator.
The crisis has dealt a blow to Boeing’s management and intensified scrutiny of its manufacturing and quality control processes, as well as those of key supplier Spirit AeroSystems. Spirit, which was spun off from Boeing in 2005, builds the Max fuselages and the door panel that exploded on the Alaska Airlines plane.
“How we interact with all of our suppliers is going to be something we’re going to be working on for quite a long time,” Calhoun told CNBC on Wednesday. Boeing outsources much of its supply chain to thousands of suppliers, including Spirit.
“When it comes to vertical integration, we’ve gone too far – yes, we probably have,” he said.
Calhoun declined to comment on reports that the bolts that were supposed to be attached to the Alaska plane’s door panel to hold it in place had never been installed.
“That’s the crucial question,” he said, noting that he doesn’t want to prejudge the conclusions of the investigation conducted by the National Transportation Safety Board.
However, he added that he was “convinced that we did it [door] plug completely under control”.
Calhoun also said the Max 9 crash was a blow to Boeing airline customers, but insisted the company had not lost their trust. The Boeing boss said he would be committed to “cutting the tail.” . . to satisfy [United Airlines chief executive] Scott Kirby,” who said his airline is reconsidering its order of the Max 10, the larger Max variant that has yet to be certified by regulators.
The company on Wednesday reported a net loss of $30 million on revenue of $22 billion for the three months ended Dec. 31, both higher than analysts’ forecasts.
Wall Street had forecast net income of $3.1 billion on revenue of $89.5 billion for 2024, according to a survey by LSEG analysts.
Boeing said it generated $4.4 billion in free cash flow in 2023, falling within the $3 billion to $5 billion range it had previously targeted. The company did not provide an update on its cash flow target for 2025-26, having set a target of around $10 billion for that period at an investor day in November 2022.
The company said Wednesday it will produce 737 Maxes at a rate of 38 per month by the end of 2023, hitting its goal.
Robert Stallard, an analyst at Vertical Research Partners, said the fourth quarter had “ironically. . . It turned out to be a decent quarter for Boeing, especially with regards to cash flow.”
“The full consequences of Max’s latest safety issues have yet to be felt, and we believe this means Boeing provided no updates on its outlook or guidance in this morning’s statement,” Stallard said in a statement, adding that Boeing’s “immediate fate is probably in the hands of the FAA.”
Calhoun said the company has “a lot to prove” to regain the trust of its stakeholders. “I have had difficult and direct conversations with our customers, regulators and legislators. They are disappointed.”
Boeing shares rose more than 3.5% as of the opening of trading Wednesday.