Earnings Results: • Revenue was $16.6 billion, down 8% versus last year primarily reflecting lower 737 delivery volume • Core loss per share was $1.13, a slight improvement versus last year • Free cash flow was a usage of $3.9 billion in the quarter, a higher usage than last year
Future Guidance: • 2024 free cash flow outlook is expected to be a generation in the low single-digit billions, back-end loaded • Longer term, remains confident in ability to achieve $10 billion of free cash flow, but will take longer than originally planned, later in ‘25-‘26 window • 737 production to stay below 38/month in 1H, with timing of rates beyond 38 predicated on work with FAA • 787 production slowing near-term, plans to return to 5/month later in year, expects to achieve 10/month by 2026 • No changes to 777X timeline, still expects first delivery in 2025
The key themes from the Boeing Q1 2024 earnings call centered around the company’s intense focus on safety, quality and stability following the Alaska Airlines 737 accident in January. CEO David Calhoun emphasized the dramatic actions taken since, including supporting investigations, working with the supply chain to prevent future issues, conducting quality standdowns, and engaging with the FAA on a 90-day plan for production system improvements.
While these efforts will slow the recovery, Boeing remains confident in the future given strong demand. CFO Brian West noted the impact to 737 margins and deliveries, with sporadic performance expected in Q2 as clean fuselages from Spirit increase. 787 production is also slowing near-term due to supply chain constraints. However, Boeing still expects to deliver most of the 737 and 787 inventory by year-end.
Longer-term, Boeing believes it can achieve its $10B free cash flow target, albeit later in the 2025-26 window due to the slower 737 and 787 ramps. The company is actively monitoring liquidity and has access to additional funding if needed, with the priority being to maintain its investment grade credit rating.
Notable Quotes: • “We immediately acted, working alongside our supply chain, to ensure the door plug depressurization event doesn’t ever happen again.” -David Calhoun • “While near-term delivery shortfalls hurt and will affect our performance during our first half of the year, the long-term benefits from a synchronized supply chain will be substantial.” -David Calhoun • “How exactly that [Spirit acquisition financing] looks? Don’t know. We’ve got the time. And importantly, at the same time, we’re going to have a factory that we expect to get more and more stable.” -Brian West