Boeing Reports $5.4 Billion Loss Due to 777X Aircraft Certification Delays and Production Challenges

Boeing's shares declined 4.1 percent in early trading sessions following concerning financial news.

United States:

Boeing disclosed a substantial $5.4-billion loss for the third quarter on Wednesday, primarily attributed to significant additional costs related to the ongoing certification delays of its 777X aircraft.

The aerospace manufacturer reported a 30-percent revenue increase to $23.3 billion, driven by substantially higher commercial aircraft deliveries compared to the same period last year.

However, this positive revenue growth was overshadowed by a one-time $4.9 billion charge associated with the 777X program, which has experienced prolonged certification challenges with U.S. aviation authorities.

CEO Kelly Ortberg highlighted the Federal Aviation Administration's October approval for increased monthly production rates on the 737 MAX as an indication of the company's operational improvements.

Ortberg also emphasized that Boeing generated positive free cash flow during the quarter, a metric closely monitored by investors and analysts.

Nevertheless, the CEO acknowledged that substantial work remains to fully transform Boeing following numerous safety incidents, including the two fatal 737 MAX crashes in 2018 and 2019 that triggered intensified FAA oversight of new aircraft certifications.

Boeing has continually extended the timeline for the 777X program. Under the latest revision, commercial deliveries are now scheduled to begin in 2027, pushed back from the previous 2026 target.

"While we are disappointed in the 777X schedule delay, the aeroplane continues to perform well in flight testing, and we remain focused on the work ahead to complete our development programs and stabilise our operations in order to fully recover our company's performance and restore trust with all of our stakeholders," Ortberg stated.

In 2020, Boeing recorded a $6.5 billion charge related to the 777X, citing the extended FAA certification process and reduced airline demand for the aircraft due to the COVID-19 pandemic.

Ortberg clarified that there were no issues with the aircraft's engine or airframe, but explained that the company had "fallen behind" on FAA authorizations for testing, affecting Boeing's ability to "fly and get certification credit," as he told CNBC.

He mentioned there might be a "minor" impact on the certification process from the ongoing U.S. government shutdown, "but clearly the government shutdown did not drive this charge," Ortberg added.

In a communication to employees, Ortberg noted that the company's defense operation in St. Louis is "effectively executing our strike contingency plans" following Sunday's vote by more than 3,000 workers rejecting Boeing's latest contract proposal.

Boeing officials in St. Louis have indicated they are accelerating recruitment of replacement workers and welcoming back employees who cross picket lines. Union representatives have accused Boeing of refusing to negotiate in good faith.

Boeing shares fell 4.1 percent in early trading following the announcement.