Boeing burnt through almost $4bn of cash in the first quarter, reflecting slower 737 Max production and compensation to customers as the US plane maker grappled with the aftermath of the mid-air accident in January.
The $3.9bn of free cash outflow is slightly lower than the $4bn-4.5bn the company had warned in March, but compares with an outflow of $786mn for the same period last year. Boeing reported a $355mn net loss in the first quarter.
The company’s financial results “reflect the immediate actions we’ve taken to slow down 737 production to drive improvements in quality”, said chief executive Dave Calhoun.
There has been a 500 per cent increase in reports to Boeing’s internal safety hotline compared with last year.
The company is working to improve processes including training, inspection and how “travelled work” where jets that move through the production line with problems addressed later in the assembly process, is handled in the 737 factory in Renton, Washington. Boeing also is attempting to stabilise its supply chain.
“Near term, yes, we are in a tough moment,” said Calhoun in a letter to staff on Wednesday. “Lower deliveries can be difficult for our customers and our financials. But safety and quality must and will come above all else.”
The plane maker is building fewer than 38 Maxes per month, reducing deliveries that are necessary to bring in cash in order to improve the quality of its manufacturing following the mid-air blowout of a door plug on an Alaska Airlines flight.
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Boeing faces investigations by aviation regulators and the US Justice Department. Though no one was killed, the explosive loss of cabin pressure injured some on board and recalled the two fatal crashes that led to the worldwide grounding of the Max for nearly two years.
A preliminary report by the National Transportation Safety Board found that four bolts meant to fasten the panel to the fuselage were missing.
A US Federal Aviation Administration audit of Boeing found “multiple instances” where it allegedly failed to meet manufacturing and quality control requirements. Regulators have given the company until the end of May to submit a plan to improve.
Boeing said on Wednesday it was “implementing a comprehensive action plan” to address the audit’s findings.
The company did not issue any financial guidance for the year on Wednesday. It initially declined to issue guidance in January, with Calhoun saying “now is not the time”.
The 737’s troubles have led to a shake-up in Boeing leadership. Calhoun said last month he would step down as Boeing chief executive at the end of the year, with the chair of the board Larry Kellner leaving after the annual meeting in May. Stan Deal, head of Boeing’s commercial plane division, departed immediately.
Boeing shares rose 3.6 per cent in pre-market trading after closing on Tuesday at $169.28.
Baird analyst Peter Arment said the stock represented “a buying opportunity”. “The kitchen sink quarter was not bad as feared, with progress expected on production, deliveries and [free cash flow] in the coming quarters coupled with a management change,” he said.
