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Boeing loses millions with Air Force One

Boeing unveiled its first quarter of 2022 financial statements. Due to uncertain deliveries and delayed approval programs, the manufacturer is still in the red. And the new Air Force One also causes costly problems for the manufacturer.

Boeing reported a loss in its core business of $ 1.5 billion for the first fiscal quarter of 2022, significantly more than in the first quarter of 2021 (loss of $ 353 million) and far more than analysts expected, who had expected a loss of nearly $ 400 million. Revenue also fell 8% to $ 14 billion, while analysts had expected it to rise to $ 16 billion.


777-9 moves backwards

Boeing suffers from persistent program delays, particularly due to late approval processes. Group head David Calhoun then confirmed that the first delivery of the new Boeing 777-9s will not happen until 2025, as we have already reported.It is a lesson from the MAX experience to not overload your departments with too tight schedules and without any room for maneuver. You also don’t want to overload employees with too much parallel work in multiple approval programs at the same time. That’s why they want to push 777-9 back a little to take care of 787 before. The FAA has the final say on all programs. The delays and necessary changes to the 777-9 resulted in an “anomalous cost” of $ 1.5 billion. Boeing plans to temporarily suspend production of new 777Xs in 2023 in favor of additional conventional-design 777 freighters. The 777X has already carried out 2000 hours of flight tests.


Boeing

The Boeing 777X is still overdue: first deliveries are not expected to be made before 2025.

787 first recovery

Here, Boeing created a new approval calendar and submitted it to the FAA for approval. Production of the Dreamliner is currently almost at a standstill because problems with parts not fitting snugly, contaminated carbon fiber material, and loosely made compensation pieces (shims) require extensive rework. 115 aircraft are therefore nearing exhaustion and cannot yet be delivered. Boeing expects FAA clearance to resume delivery of modified aircraft in the near future. So the production rate of the new Dreamliners in Charleston is expected to rise again to five aircraft per month as a target.

The Boeing 737 MAX 10 took off with its maiden flight on June 18, 2021.

Boeing

The 737 MAX-10 also faces delays in its certification.

The MAX heap needs to be dismantled

In the case of the 737 MAX, there are also 320 pre-produced aircraft still in stock, the delivery of which was allowed by the re-release. This backlog of deliveries is expected to be cleared by the end of 2023, CEO Calhoun announced Wednesday. With delivery, customers also transfer the last tranche of the purchase price, so more money goes to Boeing’s checkout. In 2022 as a whole, “cash flow will be positive again,” Boeing announced, and the situation will improve again in 2023. The new construction of the MAX plans to increase to 31 aircraft per month. According to CEO Calhoun, the 737 MAX has proven itself in use with a high reliability of over 99%.


Approval of MAX 10 is under pressure

In contrast, the Boeing 737 MAX 10 suffers from delays in the certification program. An exceptional period expires at the end of the year, within which Boeing can still complete the MAX 10 approval under the previous approval rules. If approval is granted later, stricter rules will apply, requiring costly changes unless Congress extends the exemption period again.


Air Force One as a losing proposition

Finally, Boeing must plan additional $ 660 million for the new Air Force One based on the Boeing 747-8. Here, a fixed price order was agreed with the Pentagon, so that all additional costs due to delays and the need for changes must be borne unilaterally by Boeing. This contract, agreed upon by Calhoun’s predecessor Dennis Muilenburg, was a “risk that Boeing probably shouldn’t have taken,” commented the current CEO. The reasons for the recent cost increases are higher costs for suppliers, higher costs for developing technical requirements, but also delays in time.


With the costs of the war in Ukraine, the costs of the aftermath of the pandemic and other cost increases, such as for military trainer Red Hawk, Boeing made a total of $ 1.2 billion in additional provisions in the first quarter.


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