One of the world’s leading aircraft manufacturers, Boeing, has announced an increase in production capacity over the past year. Recently, their share price even rose by 8%. However, despite these gains, the company reported a loss of at least $11.8 billion (1.18 billion dollars) in 2024, marking the highest loss in the past four years.
Last Tuesday, Boeing itself revealed this information in an announcement. The loss was primarily due to issues within Boeing’s main units, along with a widespread workers’ strike, which led to a prolonged halt in the company’s production. This situation has posed a major challenge for Boeing’s CEO, Kelly Ortberg, who is attempting to turn around the American aircraft manufacturer.
Analysts say Boeing has fallen behind its competitor Airbus in the supply race and has faced increased scrutiny from regulatory authorities and customers due to multiple errors. Boeing’s Chief Financial Officer, Brian West, told analysts that in January, Boeing delivered 33 aircraft of its best-selling 737 model.
Brian West also mentioned that the company will be in a position to exceed the Federal Aviation Administration’s imposed limit of producing 38 units per month by the end of this year, although approval from the FAA will be required. He said, “Increasing the production rate in the second half of the year will have a positive impact, including aiming for 38 units per month and possibly even more, but this will require approval from the Federal Aviation Administration.”
In an interview, Ortberg stated that he is not overly concerned about U.S. President Donald Trump’s threat to impose tariffs on trade partners, although it could impact Boeing’s extensive supply chain. He also mentioned that Boeing has no plans to start any new aircraft projects in the near future.
Meanwhile, Boeing’s stock price increased by as much as 7.6%, reaching its highest level in nearly six months. However, the price later decreased slightly. The company faced a significant setback last year after a mid-air crash involving one of its aircraft, leading to increased safety concerns. Despite this, Ortberg stated that the company is now restoring production stability.
On the other hand, Boeing’s financial position has been under pressure due to lower production in 2024, pushing the company’s credit rating to near “junk” status (the level at which investors typically lose confidence in investments). The company’s inventory, valued at $87.5 billion, collected from suppliers, has further exacerbated this crisis.
West stated that once production stabilizes, inventory will decrease, and cash flow will improve. He said, “We are investing in stability and are committed to bringing our factories into the right position.”
Rating agency Moody’s completed its reevaluation of Boeing’s credit rating on Tuesday. There had been concerns about a possible downgrade. However, Moody’s has maintained Boeing’s previous rating of ‘Baa3,’ which is just one step above junk status.
Ortberg stated that Boeing has returned to a production rate of five units per month for the wide-body 787 model and plans to increase it to seven units per month in the coming months. However, the company is facing supply chain issues concerning parts, including seats.
In an interview, Ortberg mentioned that he is considering selling some non-core units from Boeing’s defense, aerospace, and services divisions. He told analysts, “This will not be a major restructuring of Boeing.” West also stated that the company will experience cash loss in the first half of the year, but positive cash flow is expected to begin in the second half of 2025.
Ortberg also stated that Boeing is in discussions with Tesla and its CEO Elon Musk to expedite the delivery schedule of the delayed Air Force One aircraft, which is being built for the U.S. President.
Liberty News’ economic correspondent reports that after recording record profits in the 2010s, Boeing faced concerns regarding the production quality and safety of its best-selling 737 Max model following two fatal accidents in 2019. As a result, the company incurred losses of over $30 billion.
LND/SAKIB
