Boeing's Q2 Earnings Results in Brief

DALLAS - Due to lower defense volume and poor performance, Boeing's second-quarter revenue of US$16.7bn, GAAP earnings per share of US$0.32, and core loss per share (non-GAAP) of US$0.37 were largely offset by greater commercial volume. Boeing reported a US$0.1bn operating cash flow surplus.

In the second quarter, Boeing had an operating cash flow of US$81m. In the same quarter a year prior, it had burned US$483m.

In the three months ending in June, the airframer reported a core loss of 37 cents per share, exceeding analysts' expectations of a loss of 14 cents per share, due to a US$240m charge at its military, space, and security sector.

According to Refinitiv statistics, revenue decreased by around 2% to US$16.68bn, falling short of estimates of US$17.57bn.

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Commercial Aircraft Earnings

Revenue for commercial airplanes grew to US$6.2bn in the second quarter due to higher Boeing deliveries, which were somewhat offset by fewer 787 deliveries (Table 4). A (3.9%) operating margin also accounts for unusual costs and period charges, such as greater R&D costs.

Except for China, the Boeing 737 MAX has almost completed its safe global return to service, and since late 2020, the fleet has logged more than 1.5 million flight hours. During the quarter, the 737 production rate rose to 31 aircraft per month.

Inspections and repairs to correct production faults have cost Boeing approximately US$5.5bn and have forced the suspension of Dreamliner deliveries for more than a year. Boeing continues to cooperate with the FAA on the Dreamliner program as it prepares aircraft for delivery and finalizes steps to resume deliveries.

Until such deliveries resume, the program will continue to produce at a relatively low pace; Boeing states that it anticipates the current rate will eventually increase to five per month. Boeing continues to forecast 787 anomalous expenses totaling roughly US$2bn, the majority of which are expected to be incurred by the end of 2023 and include the US$283m recorded in the most recent quarter.

169 Boeing 737 MAX aircraft and 13 freighters, including seven 777-8 Freighters from Lufthansa Group (LH), were ordered. 121 commercial aircraft were delivered during the quarter, while the backlog was over 4,200 aircraft worth US$297bn.

Comments from Boeing CEO

"We made important progress across key programs in the second quarter and are building momentum in our turnaround," said Dave Calhoun, Boeing President and Chief Executive Officer.

"As we begin to hit key milestones, we were able to generate positive operating cash flow this quarter and remain on track to achieve positive free cash flow for 2022. While we are making meaningful progress, we have more work ahead. We will stay focused on safety, quality, and transparency, as we drive stability, improve performance, and continue to invest in our future."

According to Boeing, its Capital's net portfolio balance was US$1.6bn at quarter-end.

Bottom Line

Boeing's second-quarter profit was lower than expected by Wall Street as its defense division declined and it was still unable to produce any 787 Dreamliner aircraft.

On the back of a 2% decline in revenue, the aircraft manufacturer reported a profit of US$193m, a 67% decrease from the same period the previous year.

By delivering more aircraft than it has since the pandemic began and selling more services to airlines and other aircraft operators, Boeing increased its cash flow.

Even though Boeing reported a larger-than-expected loss due to the charges in its defense and space sector, shares of the company increased by 3.6% in premarket trade in part due to its commercial revenue growth.

Resuming wide-body Dreamliner deliveries would be a major accomplishment for Boeing as it attempts to turn around its financial situation in the midst of a boom in air travel.

Featured image: BOEING N789EX BOEING 787-9 DREAMLINER. Photo: Brandon Farris/Airways