Overview

Boeing reported a challenging nine months through September 2024, with significant financial and operational impacts from several issues. These include the grounding and required inspections of 737-9 aircraft following a mid-exit door incident, an ongoing work stoppage by the International Association of Machinists and Aerospace Workers, and ongoing supply chain disruptions and production challenges across the company’s commercial, defense, and services businesses.

Financial Performance

Boeing’s revenues for the first nine months of 2024 declined 8% to $51.3 billion compared to the same period in 2023. This was driven primarily by a 23% drop in revenues at the Commercial Airplanes (BCA) segment, partially offset by increases at Defense, Space & Security (BDS) and Global Services (BGS).

The company reported a GAAP loss from operations of $6.9 billion, compared to a $1.1 billion loss in the prior year period. On a non-GAAP basis, Boeing’s core operating loss was $7.8 billion, up from a $1.9 billion loss in the first nine months of 2023. The increased losses were driven by:

• BCA: Reach-forward losses on the 777X and 767 programs, lower deliveries, production disruption, and customer considerations related to the 737-9 grounding
• BDS: Higher charges on major fixed-price development programs like T-7A Red Hawk, KC-46A Tanker, and Commercial Crew
• Unallocated items: Higher research and development expenses and eliminations/other costs

Boeing reported a net loss attributable to shareholders of $8.0 billion ($12.91 per share) for the first nine months, compared to a $2.2 billion ($3.64 per share) loss in the prior year period.

Segment Performance

Commercial Airplanes (BCA) BCA revenues declined 23% to $18.1 billion, driven by lower deliveries across all programs and customer considerations related to the 737-9 grounding. BCA reported a $5.9 billion operating loss, compared to a $1.7 billion loss in the prior year, reflecting the reach-forward losses, lower deliveries, and production disruption.

The 737 program continued to face challenges, with the FAA initiating an investigation into Boeing’s quality control system. Production rates were slowed to address quality issues, but then paused entirely in September due to the IAM 751 work stoppage. Certification of the 737-7 and 737-10 models has also been delayed.

The 777 and 777X programs experienced factory disruption, supply chain delays, and certification challenges, leading to a $2.6 billion reach-forward loss. First delivery of the 777-9 is now expected in 2026, with the 777-8 passenger version not expected before 2030.

The 787 program continued to face supply chain constraints and production issues, with around 30 aircraft in inventory requiring rework.

Defense, Space & Security (BDS) BDS revenues increased 2% to $18.5 billion, but the segment reported a $3.1 billion operating loss, up from a $1.7 billion loss in the prior year. This was driven by higher charges on major fixed-price development programs like T-7A Red Hawk, KC-46A Tanker, and Commercial Crew.

BDS backlog grew to $61.6 billion, with 28% attributable to non-U.S. customers. However, the segment continues to face risks on its complex development programs, some of which are contracted on a fixed-price basis.

Global Services (BGS) BGS revenues increased 4% to $14.8 billion, and operating earnings grew 5% to $2.6 billion. The improved performance was driven by higher commercial services revenue, partially offset by lower government services.

BGS backlog increased to $20.4 billion, reflecting the timing of new awards.

Cash Flow and Liquidity

Boeing consumed $8.6 billion in operating cash flow during the first nine months of 2024, compared to $2.6 billion of cash provided in the prior year period. This was primarily driven by the commercial airplane business, with slowed production, lower deliveries, and supply chain constraints leading to unfavorable changes in working capital.

The company ended the third quarter with $10.0 billion in cash and $10.0 billion of available borrowing capacity on revolving credit lines. Boeing issued $10.0 billion in new fixed-rate senior notes during the second quarter to bolster its liquidity position.

In June 2024, Boeing announced an agreement to acquire Spirit AeroSystems in an all-stock transaction valued at $4.7 billion. This will include the assumption of Spirit’s net debt at closing.

Outlook and Risks

Boeing faces significant near-term challenges that will continue to impact its financial performance. These include:

• Ongoing supply chain disruptions and labor instability, including the IAM 751 work stoppage, which have disrupted production across the company
• Delays and challenges with key development programs like the 737, 777X, and various defense programs
• Potential further impacts from the 737-9 grounding and required inspections
• Uncertainty around future U.S. government defense and space budgets

The company’s ability to ramp up production, deliver aircraft, and manage its complex development programs will be critical to improving its financial position. Boeing also faces risks related to the acquisition of Spirit, potential business disruptions, legal/regulatory issues, and pension/environmental liabilities.

Overall, Boeing is navigating a very difficult operational and financial environment, with significant near-term headwinds that will require careful management and execution to overcome. The company’s long-term competitiveness and growth will depend on its ability to stabilize its operations, deliver its key programs on time and on budget, and restore the confidence of customers, regulators, and investors.