Boeing reports quarterly loss hit by charges

July 27 Boeing Co reported its first quarterly loss in almost seven years, hit by charges related to the 787, 747 and KC-46 tanker aircraft programs.

Boeing reported a loss of $234 million, or 37 cents a share, compared with a year-earlier’s profit of $1.1 billion, or $1.59 a share, a year earlier. During the same period past year, the firm earned $1.97 earnings per share. In the same period a year ago, the company reported earnings per share (EPS) of $1.62 on revenues of $24.54 billion. The negative earnings followed $2.1 billion in unexpected charges that were announced last week.

The company’s commercial airplane division had a 3% gain in revenue during the quarter, to $17.5 billion, based on delivering two more planes than during the same period a year earlier. The world’s largest aerospace company said its operating cash flow prediction remained unchanged at about $10 billion.

“If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747”, Boeing said in the filing Wednesday.

“The underlying operating performance of the company remains solid with our commercial and defense teams again delivering strong revenues and operating cash flow”, Dennis Muilenburg, Boeing’s chairman, president and CEO, said in a statement. Analysts, on average, expected a loss of 93 cents a share, according to Thomson Reuters I/B/E/S. The decline totaled $978 million, most of which is down to the $847 million ($1.24 billion pretax) charge against the program.

Boeing had planned to sell the two seven-year-old 787 Dreamliners after refurbishing and modifying them for commercial use.

The charges include a 1.2 billion dollar (£913 million) write-down before taxes on its 747-8 aeroplane due to weakness in the air cargo market.

Problems found during test flights mean delivery of the 18 tankers may be five months’ late – forcing Boeing to write-off a further $354m (£270m) on top of the charges it has already incurred.

However, some of this increase was related to the sale of its stake in Dassault Aviation, as Airbus has also encountered teething troubles and losses linked to its long-awaited A350 passenger plane – billed by some as its answer to Boeing’s Dreamliner. Boeing also repurchased 15 million shares in the quarter, more than double the amount expected, Seifman said in a report.

Deferred production costs for the 787 fell 3.4 percent to $27.7 billion from the first quarter. Through Tuesday, Boeing had declined 6.7 percent this year, the sixth-worst performance among the 30 members of the Dow Jones Industrial Average.