Boeing’s Revenue falls in Q1 amid B737 MAX troubles

Today, (24/04) Boeing published its financial results from the first quarter of 2019. The American manufacturer has felt the effect of a global grounding of the B737 MAX series and has had worse results than in 2018. Boeing noted a rare year on year decrease in revenues, from $23.4 billion last year to $22.9 billion now. The operating margin fell by 2% to 10.3%, and the EPS was at $3.16, 13% lower than a year ago.

Boeing has reduced the number of deliveries in the first Quarter of 2019 to 149. Image Courtesy: Boeing

Importantly, Boeing has also temporarily suspended its 2019 guidance, also halting share buybacks. The reason behind the suspension of the guidance is the uncertainty with the 737 MAX series caused by the two fatal crashes in Indonesia and Ethiopia. In the earnings release Boeing stated:

“Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date”.

Boeing claimed to be making steady progress in obtaining certification for the software update, which would allow the B737 MAX’s to take the sky again. The firm has accomplished more than 135 tests and continues to work with global regulators as well as airlines in order to ensure the full safety of the update. The update is crucial not only for letting the B737 MAX’s fly again, but also in order allow Boeing to improve its safety record.

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Boeing’s CEO, Dennis Muilenburg claimed that the firm’s goal is to have a ” healthy sustained growth business built on strong, long-term fundamentals.”, naming safety as one of them. Image courtesy: Boeing

Fewer deliveries

Another important element in the report is the announced fall in the number of commercial aircraft deliveries. Boeing delivered 149 commercial aircraft in Q1, 19% less than in 2018. The difference was made by Boeing’s most popular jet, as the firm delivered 43 B737’s less than the year before.  The revenues from commercial aircraft did not tank dramatically, partially thanks to order of 17 B777X from IAG and 20 B787s from Lufthansa as well as 10 B787s for Bamboo Airways.

Operating cash flow fell to $2.7 billion from $3.1 billion in 2018. Boeing has spent $1.2 billion on dividends in the first quarter of 2019 and $2.3 billion on share buybacks, purchasing 6.1 million shares. The firm has  suspended the share buybacks since mid-March.

The rollout of a fully built Boeing 777X also took place in Q1. Image courtesy: Boeing

Other segments

On a more positive note, the revenues from Defence, Space and Security stood at $6.6 billion, a 2% year on year increase. That sector recorder earnings of $847 million, 12% higher than last year. The revenue from global services was at $4.6 billion, 17% higher than in 2018. The backlog for commercial aircraft orders remains at 5,600 aircraft, valued at $399 billion.

As a result of this news, Boeing’s stock initially went down but later recovered to around +1% in pre-market trading. It remained at around $376,88 shortly after the opening.

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Bob Braan

Boeing has a lot of problems other than the 737 Max disasters. Obviously the FAA is still Boeing’s lapdog. The FAA and Boeing also said this plane was safe to fly originally. Until it wasn’t. The US may allow this self-crashing plane to fly but don’t try to go anywhere else. Canada already says simulator training is required. Other countries take safety seriously like the US used to. FAA says simulator training still isn’t required due to cost!! Sort of like safety equipment is optional. Only if they corrected the aerodynamics so MCAS isn’t needed (like every other airliner) and… Read more »