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Boeing gets $2.8 billion in defense business. Stocksak: Boeing keeps cash flow goal.


© Stocksak. FILE PHOTO – The Boeing logo can be seen on the side a Boeing 737 MAX at Farnborough International Airshow in Farnborough, Britain on July 20, 2022. REUTERS/Peter Cziborra

By Rajesh Kumar Singh and Abhijith Ganapavaram

(Stocksak). The Boeing Co’s insolvent defense unit recorded a $2.8B charge on Wednesday. However, the U.S. planemaker remained true to its forecast of generating cash this fiscal year, despite having difficulty securing more commercial jet production due labor shortages.

Shares fell 4% following the results. Cost overruns at Boeing (NYSE)’s defense, security and security segment have hampered a recovery by the company that tries to get out of multiple crises by cashing-in on rising air travel demand.

Boeing and Airbus SE (OTC;) have both increased production of narrowbody aircraft. Boeing delivered 112 jets during the third quarter, compared with 85 jets last season.

This allowed it to generate a $2.9 billion free cash flow in the quarter. It had incurred a cash loss of $507 million in that same period last year.

However, rising cost pressures in the U.S. have made it difficult to secure fixed-price contracts with U.S. aerospace companies and defense firms. The industry body asked the U.S. Congress to provide inflationary relief.

According to the planemaker, it was charged with Air Force One’s VC-25B program, also known as Air Force One, and on the KC-46A refueling-tanker program.

In a message to employees, Boeing Chief Executive Dave Calhoun stated that losses on fixed-price defense programs had significantly impacted earnings and revenue. He also noted that higher manufacturing and supply chain costs have impacted revenue and earnings.

Stocksak reported Tuesday that the company has hired Steve Parker, a senior troubleshooter, to help it turn around its loss-making programs in its defense division.

According to company data, Boeing sold 86 MAX aircraft in the quarter. That’s about 29 per month. To meet its 737 MAX delivery goal of “low 400s”, it will need to deliver approximately 44 jets per quarter in the fourth quarter.

Calhoun stated that Calhoun added more than 10,000 employees and is investing in their training and education to improve productivity and accelerate the experience curve.

He said that “within our production facilities we’re not pushing it too fast”, underscoring the difficult environment for the aerospace industry.

The sector is experiencing persistent supply shortages, mainly of workers and castings. General Electric (NYSE:) Co stated Tuesday that it was beginning to see signs of supply problems easing.

The third quarter revenue increased 4% to $15.96 trillion, but the adjusted loss per share increased to $6.18 from $0.60 last year.

Global services, which provide spare parts and services like jet conversions, saw strong demand during the quarter to September. Revenue rose 5%.

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Stocksak Editorial

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