winning plus Hopes for turnaround lift Boeing shares despite huge losses

(FILES) The Boeing logo is pictured as Boeing’s 737 factory teams hold the first day of a “Quality Stand Down” for the 737 program at Boeing’s factory in Renton, Washington on January 25, 2024. Boeing announced January 23 that it incurred a bigger than expected fourth-quarter loss, concluding a difficult 2024 in which it struggled with a lengthy labor strike and safety problems. The US aviation giant projected a loss of $5.46 per share, much above the $1.55 foreseen by analysts, according to a profit warning that cited the costs of a new labor agreement, among other factors. (Photo by Jason Redmond / AFP)

New York, United States — Boeing reported a hefty fourth-quarter loss Tuesday following a bruising 2024, but shares rallied on hopes that early turnaround signs under a new CEO may bear fruit.

The US aviation giant reported a loss of $3.9 billion as the company continued to experience a hit from a more than seven-week labor strike that shuttered two major assembly plants.

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But Chief Executive Kelly Ortberg, who joined Boeing in August, said the company is making progress.

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Company officials said they expect to lift 737 MAX production in 2025 and to clear out planes in inventory, improving the outlook for free cash flow later in the year.

READ: Boeing took nearly $3 billion hit in Q4 related to strike, layoffs

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Boeing has worked with the Federal Aviation Administration (FAA) on “an agreed upon path for rate increases” on the 737 MAX, Ortberg told analysts.

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Ortberg described a number of operational performance indicators that look at parts shortages, work performed out of sequence and other factors.

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The FAA has limited Boeing’s output of the MAX to 38 planes per month as it keeps close oversight of Boeing following two fatal MAX crashes in 2018 and 2019 that killed more than 300 people.

The FAA will only lift that level if Boeing makes continued progress on safety concerns.

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“We need to stay disciplined on maintaining a stable production system,” he said. “But early signs are encouraging.”

Boeing’s fourth quarter loss took the company’s full-year loss — its sixth in a row — to $11.8 billion.

The results were consistent with a January 23 profit warning in which Boeing flagged the impact of the labor strike on company operations.

The 31 percent drop in fourth-quarter revenues to $15.2 billion reflected a hit from fewer plane deliveries, which came in at barely a third of the level in the 2023 period as the labor stoppage halted output on the 737 MAX and the 777.

Boeing’s performance was also marred by a troubled flight in January 2024 in which a 737 MAX flown by Alaska Airlines made an emergency landing after the plane suffered a mid-flight blowout on a window panel.

Following that incident, Boeing faced intensified scrutiny from US air regulators and slowed output.

Boeing has also continued to suffer from legacy fixed-cost defense contracts that have led to losses for the company. Boeing’s profit warning flagged one-time costs of $1.7 billion in its defense, space and security division.

Ramping up

Ortberg told CNBC that Boeing is “actually a little ahead of where I expected” in terms of ramping up production on the 737 MAX following the strike and intensified process control checks after the Alaska Airlines incident.

Boeing has been producing the MAX at under the 38 per month authorized by the FAA. Analysts view the restoration of output to 38 per month and subsequent production increases as critical to Boeing’s profit outlook.

Ortberg expressed confidence in achieving higher MAX output, telling CNBC “I expect by the second half of the year, we’ll have that approval, and we’ll be moving to a higher production rate.”

Ortberg also said he had met with Trump administration representative Elon Musk about Air Force One, the highly customized Boeing plane that flies the president.

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Trump has installed Musk, the world’s richest man, as an advisor on cutting government spending.

“The President wants the airplane sooner, and so we’re working with Elon and the team to figure out what can we do to pull up the schedule of that aircraft,” Ortberg said, speaking about replacement planes.

Shares of Boeing finished up 1.5 percent.

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“It seems investors are focusing on the improvements on the production front and focusing less on the financial results,” said Briefing.com. “We also think investors are looking a few quarters ahead on the hopes of a turnaround.”

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This development was the latest milestone for the companywinning plus, which has seen its local market grow in value to multiple hundreds of millions of pesos annually.