Boeing reported a smaller loss in the first quarter compared to the same period a year earlier but warned investors and employees that it will need to further cut back production to address quality and safety issues on its production line. The core operating loss was $388 million, an improvement from the $440 million loss a year ago, although the losses from the commercial airplanes unit nearly doubled to $1.1 billion. Revenue also declined 8% to $16.6 billion due to a drop in deliveries of jets to airline customers.
The company plans to produce fewer 737 Max jets than originally planned for the rest of the year as it works to fix problems on its assembly lines. Production of the larger 787 Dreamliner will also be limited due to supplier issues. CEO Dave Calhoun announced plans to leave his post by the end of the year, emphasizing the need to strengthen quality and safety management systems for a more stable future. The results were impacted by compensation to airline customers following the grounding of 737 Max 9 jets after an incident involving Alaska Airlines.
Boeing did not disclose the compensation amount to airlines, although Alaska Air received $162 million in initial cash compensation and United Airlines received credits on future purchases. Investigations by the NTSB, FAA, and Justice Department have focused on Boeing’s safety and quality practices, with potential criminal liability. The company has committed to improving quality and safety issues and encourages employees to report concerns. Despite ongoing challenges, Boeing’s stock rose over 3% in pre-market trading on the better-than-expected loss.
Boeing has faced losses and quality issues with its planes for several years, including two fatal crashes of the 737 Max and subsequent problems once the model returned to service. The company has reported core operating losses of $31.9 billion since the start of the 737 Max grounding in 2019. While it had a successful year in terms of orders and deliveries in 2023, issues with the Alaska Air flight halted progress. The incident highlighted a design flaw in the plane and drew attention to the company’s treatment of employee concerns.
Investigations into the Alaska Air incident are ongoing, with preliminary findings indicating a missing bolt on the door plug of the jet. The story is developing and will be updated as more information becomes available. Boeing is working to address safety and quality concerns while navigating financial challenges and a shifting production timeline. Despite setbacks, the company has shown resilience and a commitment to improvement in its operations to ensure a stronger and more stable future.
