Boeing reported another hefty loss Wednesday as it trimmed its full-year forecast for deliveries of the 737 to address a manufacturing problem on the aircraft.
The US aviation giant, which has struggled with manufacturing and quality control issues in recent years, reported a third-quarter loss of $1.6 billion,which translated into a bigger per-share hit than analysts estimated.
The latest issue with the 737 is the result of misshapen holes drilled in a part of the fuselage that helps maintain plane pressure. Boeing said the problem is not “an immediate safety of flight issue.”
However, the company is inspecting and reworking undelivered planes. As a result, Boeing now expects 737 deliveries of 375-400 this year, down from the earlier 400-450 projection.
The issue also weighed on third quarter deliveries, denting revenues, which came in at $18.1 billion, below the level in the second quarter.
The latest issue has added to scrutiny on Spirit AeroSystems, a major Boeing supplier that produces the fuselage for the 737 and also works extensively on Boeing’s other best-selling jet, the 787 Dreamliner.
Earlier this month, Boeing reached an agreement with Spirit that includes immediately pumping $100 million into the smaller company.
Boeing Chief Executive Dave Calhoun told CNBC the additional funds give Spirit the “breathing room they need to meet our rate requirements” as the airplane manufacturer seeks to boost production to meet demand from airlines.
Calhoun said he has “a lot of confidence” in Spirit, which recently appointed a new chief executive.
Boeing’s bottom line in the quarter was also affected by a $482 million loss in the Air Force One US presidential plane “related to engineering changes and labor instability, as well as resolution of supplier negotiations,” Boeing said.
Another $315 million hit came from losses in a satellite contract, also in Boeing’s defense, space and security business.
Calhoun told CNBC that the company’s outlook for its defense business is “getting more and more robust every day,” but alluded to recent turmoil on Capitol Hill, where Republicans have struggled to elect a new speaker of the House of Representatives.
“If we can get some help from the Congress… we will ultimately realize those gains,” Calhoun said, adding that passage of a defense package “needs to happen, period.”
Boeing reaffirmed its outlook for 2023 free cash flow, a closely watched investor benchmark, and said it was on track with a plan to boost production on the 787 Dreamliner.
“We continue to progress in our recovery and despite near-term challenges, we remain on track,” Calhoun said in the company’s press release.
“The important work we’re doing to add rigor around our quality systems and build a culture of transparently bringing forward any issue, no matter the size, can bring short-term challenges — but it is how we set ourselves on the right course for our long-term future.”
While Boeing’s drop in plane deliveries was disappointing, “the good news is that customers still want Boeing planes,” said Christopher Raite, analyst at Third Bridge.
“However, execution on the backlog is the key question for investors, and this will continue to be a challenge.”
Shares of Boeing fell 2.3 percent in early trading.
