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Boeing’s cash flow beats estimates with 787 Dreamliner comeback

Oct. 26, 2022 Updated Wed., Oct. 26, 2022 at 11:41 a.m.

The Boeing logo is displayed at the company's booth during the Special Operations Forces Industry Conference in Tampa, Fla., on May 17.  (Luke Sharrett/Bloomberg)
The Boeing logo is displayed at the company's booth during the Special Operations Forces Industry Conference in Tampa, Fla., on May 17. (Luke Sharrett/Bloomberg)
By Julie Johnsson Bloomberg

Boeing’s cash surged last quarter as it restarted 787 Dreamliner deliveries after a lengthy halt, giving investors a glimpse of the bounty that awaits as the manufacturer clears hundreds of undelivered aircraft from its storage lots.

The planemaker reported $2.9 billion of free cash flow for the third quarter, outpacing the $1.02 billion average of estimates compiled by Bloomberg. It’s only the second time Boeing has generated positive cash since Chief Executive Officer Dave Calhoun took the top job in early 2020.

The performance overshadowed more bad news from the Arlington, Virginia-based company’s defense division, which racked up $2.8 billion in losses due to cost overruns on its KC-46 aerial tanker, Air Force One and other military contracts.

Boeing’s adjusted loss was $6.18 a share in the period, the company said Wednesday in a statement. Analysts had expected slightly positive earnings, marking the company’s fifth consecutive earnings miss. Revenue of $16 billion also fell short of the $17.7 billion expected by Wall Street.

The uneven results underscore Boeing’s slow progress in overcoming supplier strains and the financial toll from two 737 Max crashes. Still, with cash bolstered by rising jet deliveries, stronger receipts and a tax benefit, the company stirred investors’ hope that it’s finally emerging from one of the worst crises in its history.

In an early-morning message to employees, Calhoun touted the progress toward Boeing’s goal of achieving positive free cash flow this year and blamed the defense 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,” Calhoun said.

Boeing had already recorded $1.5 billion in cost overruns on fixed-price defense contracts during the first half of this year as it dealt with shortages of workers with security clearance and other supplier stresses. Calhoun declared in April that the company would no longer bid near its estimated costs as it did last decade to secure high-profile contracts, from a military trainer to the Air Force One replacements now facing ballooning expenses.

The planemaker is working to mitigate risks on the programs, Calhoun said. He touted other work underway to stabilize Boeing’s factories, like hiring 10,000 employees, expanding digital tools to track inventory, creating teams of experts to address industrywide shortages and ramping up its own parts-fabrication capacity to help offset supplier shortfalls.

Boeing’s cash and marketable securities rebounded to $14.3 billion from $11.4 billion in the second quarter, and the manufacturer said in presentation slides that it has “sufficient liquidity.” That’s a crucial cushion for a company with a $55.7 billion debt load.

The shares were little changed as of 8:06 a.m. before the start of regular trading in New York, recovering after a sharp dip in premarket trading. Boeing had declined 27% this year through Tuesday’s close.

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