Boeing‘s Max aircraft safety crisis is causing the company to lose liquidity, meaning the U.S. maker will need more time to meet a key financial target for years to come, its chief financial officer, Brian West, said on Wednesday.
The airline is trying to get safety issues under control after an incident on Alaska Airlines Flight 1282 on Jan. 5 brought it under U.S. regulators and frustrated airlines, which are already struggling with delivery delays from both Boeing and rival Airbus.
Boeing Chief Financial Officer Brian West told a Bank of America conference that Boeing’s cash flow in the first quarter would be somewhere between $4 billion and $4.5 billion. dollars, higher than they planned in January.
Meanwhile, profit margins in the commercial aircraft segment will be “rather negative by 20%” in the first quarter, partly due to customer compensation for delivery delays, and while improving over the course of the year, they will still be negative overall in 2024.
The order delays are frustrating airline executives, who, according to Bloomberg, have begun cutting routes and are trying to acquire additional aircraft to meet demand. Michael O’Leary, chief executive of Boeing’s main European customer Ryanair, told Reuters he would meet senior Boeing executives in Dublin to discuss prolonged delivery delays, with Boeing declining to comment on the visit.
U.S. regulators have limited Boeing’s 737 production to 38 a month, but, according to Mr. West, Boeing produces less than this allowance, but did not elaborate.
“We’re deliberately going slow to get it right,” West spoke at the conference. “We are the ones who made the decision to slow down the 737 program…And we will feel the impact of that in the coming months,” he said.
Lower deliveries, lower production volumes and pressure on working capital affect free cash flow. That means Boeing will need more time to meet its 2022 goal of achieving annual cash flow of about $10 billion by 2025 or 2026, according to West.
