By Dan Catchpole and Shivansh Tiwary
SEATTLE, Oct 27 (Reuters) – Boeing CEO Kelly Ortberg said on Tuesday that the company will not reach its 737 production rate target of 47 jets a month until next year, a serious setback to the company’s ongoing recovery.
The company had planned to reach the target this past summer, but it will take “into early next year,” Ortberg said during an interview on CNBC.
In September, he said that Boeing has not been able to make wings fast enough.
Deliveries of the popular single-aisle jetliner are a major driver of Boeing’s cash flow.
Shares of the US planemaker fell 2.5% in premarket trading even as Boeing continues to recover from years of crises and controversies that dented its reputation, drained cash and saddled it with a heavy debt load.
During the quarter, Boeing secured certification for the 737 MAX 7 from US regulators, won the US Navy’s sixth-generation F/A-XX fighter contract and generated free cash flow for another quarter, while certification of the larger MAX 10 followed in October.
“Expectations are rising, and they should. We have a stronger foundation than a year ago, but we also have more work to do to deliver on our backlog, strengthen our culture, and improve how we work every day,” Ortberg said in a memo to employees after the results.
Boeing reported an adjusted loss of 34 cents per share for the quarter through September, compared with market expectation of 21 cents, according to data compiled by LSEG.
Revenue at Boeing Commercial Airplanes dipped slightly to $10.7 billion, while operating loss stood at $697 million and margin shrank by just 6.5% compared with a contraction of 48.3% a year ago.
The company attributed the performance to less profitable jetliner deliveries and higher production costs, including from its supply chain.
At Boeing’s defense division, higher deliveries, improved operational performance and a $252-million sale of a subsidiary contributed to nearly $500 million in quarterly earnings with an operating margin of 6.2%, up from 1.7% a year ago.
Boeing Global Services earned $1 billion and posted an operating margin of 18.3%.
The US planemaker ended the quarter with $25.2 billion in net debt, down slightly from $25.9 billion in the previous three months and $30.4 billion a year ago.
(Reporting by Dan Catchpole in Seattle and Shivansh Tiwary in Bengaluru; Editing by Lincoln Feast and Arun Koyyur)
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