Markets

Boeing’s €2.8bn defence loss drives another earnings miss

Shares are down 27% so far this year as aerospace group delivers free cash flow well in excess of expectations

A $2.8 billion loss by its defence unit pushed Boeing to another earnings miss. Photograph: T. Narayan/Bloomberg

Wed Oct 26 2022 - 15:30

Boeing fell short of Wall Street’s estimates for third-quarter sales and profit, dragged down by $2.8 billion (€2.78 billion) in defence losses from cost overruns on its aerial tanker, Air Force One and other military contracts.

That marked the fifth consecutive earnings miss as the Arlington, Virginia-based manufacturer has grappled with supplier strains, pandemic-related challenges and the financial toll from two 737 Max crashes.

Boeing said Wednesday that it had an adjusted loss of $6.18 (€6.16) a share, while analysts predicted slightly positive earnings. Revenue was $16 billion, while analysts expected $17.7 billion on average.

Still, the aviation titan provided a tantalising glimpse of its financial potential, generating $2.9 billion in free cash flow as it resumed 787 Dreamliner deliveries after a lengthy halt.

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The cash bonanza is far greater than the $1.02 billion that Wall Street had expected. It’s only the second time Boeing has reported positive quarterly cash flow since chief executive Dave Calhoun took the top job in early 2020.

In an early-morning message to employees, Mr Calhoun touted the progress toward Boeing’s goal of achieving positive free cash flow this year and blamed the defence unit’s latest losses on “higher estimated manufacturing and supply-chain costs, as well as technical challenges on a handful of military programs with fixed-price contracts”.

“Turnarounds take time – and we have more work to do – but I am confident in our team and the actions we’re taking for the future,” Mr Calhoun said.

Boeing shares have declined 27 per cent this year through Tuesday’s close. — Bloomberg

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