Boeing CFO says cash flow to be hit by production delays

By Steve Goldstein

The troubled plane maker is focusing on quality after a spate of incidents

Boeing's chief financial officer on Wednesday said cash flow will be worse than the company had expected even back in January as the troubled plane maker focuses on quality after a spate of incidents.

CFO Brian West told a Bank of America conference that lower deliveries, a worse mix and working capital pressure are all contributing to a hit of between $4 billion and $4.5 billion for the current quarter. Some of that, he added, will not be made up by the end of the year.

Boeing shares (BA) slipped 2% in premarket trade. The stock has dived by 31% this year.

"For years we prioritized the movement of airplanes in the factory over getting it done right and that has got to change," said West.

Citi analyst Jason Gursky, commenting on West's guidance, said the "long-term thesis [is] intact but near-term catalysts appear scarce."

Boeing has previously said it was lowering the production rate on the 737 to below 38 per month. West, as he previously has stated, said it will be up to the Federal Aviation Administration to determine when the company can begin increasing production.

Boeing has been under intense pressure since a fuselage panel flew off an Alaska Airlines 737 Max jet in January. More recently, Boeing told airlines to check 787 cockpit seats after a sudden plunge led to injuries.

West talked about getting "traveled work" down and quality up as he reiterated the company may acquire contractor Spirit AeroSystems (SPR). "It's really about focus, running that business as a factory rather than a business," West said. Any deal would be financed by cash and debt and not by equity, he added.

He said Boeing will only accept a fully conforming fuselage from Spirit at its Washington state factory.

West added that achieving an investment-grade rating is still a priority but it will be on a timeline further out than 2025 to 2026.

West did note that both the 787 and 737 are sold firm through 2028. "Commercial demand continues to be robust," said West.

-Steve Goldstein

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03-20-24 0856ET

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