Boeing, the US-based aerospace giant, has reported a massive loss of $4.16 billion for the fourth quarter, largely attributed to the lingering production woes with its 787 Dreamliner. The company took a whopping $3.5 billion charge to account for the additional delays in delivering the 787 jets and compensation for airlines still waiting to receive their planes. Moreover, the manufacturing issues with the 787 are expected to add $2 billion in unusual production costs, more than double the initial estimate.
The 787, a two-aisle commercial airliner, has been plagued by production flaws, including gaps where panels of the carbon-composite fuselage are joined. Despite design changes and FAA approval in the past, the plane has been grounded since May 2021, and Boeing has been unable to come up with a fix that satisfies the FAA. The failure to resume deliveries is causing headaches for airline customers, including American Airlines, which has dropped international flights planned for next summer.
The situation is unfolding at a time when Boeing is trying to move past the controversy surrounding the 737 Max, which was grounded worldwide for nearly two years after two crashes killed 346 people. However, Boeing’s delivery of 245 Max jets last year brought in much-needed cash. The company’s financial struggles are further compounded by a $402 million write-off for a refuelling tanker that it produces for the US Air Force, causing its defence and space business to report a loss.
Boeing’s Financial Woes Deepen as 787 Production Flaws Persist
Despite the unprecedented losses, revenue for the quarter was $14.16 billion, which is down 3% from the previous year. The company’s Chief Executive David Calhoun expressed optimism about the long-term prospects for the 787, referring to 2021 as a rebuilding year. He also noted that the airline industry’s recovery from the pandemic has spurred demand for new planes, which he believes will benefit Boeing.
Commenting on the company’s financial performance, Calhoun reportedly sent a note to staff acknowledging the challenges and expressing confidence in the company’s ability to overcome them. Shares of Boeing actually rose about 2% in early trading, a sign that investors are willing to overlook the current financial woes for the long-term potential of the company.
