Salem Radio Network News Monday, May 16, 2022

Business

Boeing sinks to loss on $3.5 billion charge related to 787 delays

(Reuters) -Boeing Co said on Wednesday it incurred a $3.5 billion charge in the fourth quarter due to longer-than-expected delivery delays of its problem-plagued 787 Dreamliner.

The company’s shares fell 0.3% in premarket trading as the planemaker sank to a loss after two quarters of profits because of the charge.

The widebody jet is integral for Boeing’s rebound from the pandemic as well as from a safety scandal caused by two fatal crashes of its 737 MAX planes.

But manufacturing flaws that produced structural defects in the Dreamliner has caused production delays and cost the company hundreds of millions in inspections and repairs.

Reuters reported last week that deliveries of the 787 are expected to remain frozen until around April as U.S. regulators review production flaws, while designs for the larger 777X face further regulatory pushback from Europe.

“While we never want to disappoint our customers or miss expectations, the work we’re putting in now will build stability and predictability going forward,” Boeing Chief Executive Dave Calhoun told employees in a memo seen by Reuters.

The U.S. planemaker had previously forecast low production rates and rework for the 787 to result in about $1 billion of abnormal costs.

The company reported a core operating loss of $4.54 billion in the fourth quarter ended Dec. 31, compared with a loss of $8.38 billion a year earlier, when the company recorded a $6.5 billion charge due to delays in its 777X jet program.

Still, Boeing generated positive cash flow in the fourth quarter, representing its first positive cash quarter since early 2019, fueled by 737 MAX deliveries as air travel rebounds from the pandemic.

(Reporting by Uday Sampath and Aishwarya Nair in Bengaluru, and Eric M. Johnson in Seattle; Editing by Saumyadeb Chakrabarty)

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