When Boeing BA-N CEO Dave Calhoun delivers the fourth-quarter results on Wednesday, he will be doing it while the plane maker is in the middle of its biggest safety crisis since the two fatal 737 MAX crashes in 2018 and 2019.
The company, long a symbol of America’s manufacturing prowess, is in the crosshairs of regulators, politicians and airlines following a harrowing mid-air cabin panel blowout on a 737 MAX 9 jet operated by Alaska Airlines earlier this month.
Analysts say Boeing leaders will try to assure people that its focus is on safety and production quality.
Executives at an aircraft financing conference on Monday backed Calhoun and the rest of Boeing’s management, but made clear the challenge the company faces to regain industry confidence.
“They’re under no illusions about the severity of the situation,” Aengus Kelly, CEO of AerCap, the world’s largest aircraft lessor, told Reuters on the sidelines of the conference.
Before the Alaska accident, Boeing was expected to release a new financial and delivery target for 2024 and provide an update on its forecast for 2025-26, the time frame in which the plane maker’s operations were expected to stabilize.
Boeing had previously projected free cash flow of about $10 billion by 2025-26, with 737 production expected to reach 50 per month.
That is now in question after the U.S. Federal Aviation Administration last Wednesday announced it would not approve further production rate increases for the 737 MAX.
The company’s projections now will be delivered with a cloud over the management’s head, with an influential industry leader saying in Dublin that the regulatory scrutiny will get worse if its record going forward is not flawless.
If there is one more significant problem “the FAA will stop (737) production,” Air Lease Executive Chairman Steven Udvar-Hazy told reporters at the Airline Economics conference on Monday.
The door plug that blew out is present on most 737 MAX 9 planes, in place of an exit airlines could have added if it wants a greater number of seats. The Jan. 5 incident is still under investigation.
Trade publication The Air Current last week reported that the door plug on the affected MAX 9 reached Boeing’s factory from Spirit AeroSystems with bolts installed, but that the plane maker reopened it to give access to nearby rivets that had been misinstalled by Spirit.
Spirit and Boeing referred queries on the probe to the National Transportation Safety Board (NTSB). Its chair Jennifer Homendy said on Jan. 18 it was too early to say if the root cause of the blowout was missing or misinstalled bolts.
Publicly executives in Dublin supported Boeing leadership, but several delegates and industry officials said privately that questions remained over the future of Boeing’s management.
“Behind the scenes everyone is livid,” a person familiar with lessor discussions with Boeing said.
Boeing shares have fallen 21% in January, putting them on track for their worst January since at least 2017. They rose about 39% in 2023 on optimism that the aerospace giant was on track to being profitable again, despite nagging quality issues.
“While we think that many U.S. investors have the ‘muscle memory’ that inclines them to buy Boeing here, we would be wary of further volatility in the share price,” Vertical Research Partners’ Robert Stallard wrote in a note last week.
Shareholders expect Boeing to recover from its most recent crisis and come out as a stronger company.
“I’m fully confident in Boeing’s long-term prospects,” said Tony Bancroft of Gabelli Funds, whose Gabelli Commercial Aerospace & Defense ETF invests at least 80% in common stocks of aerospace and defence companies, including Boeing.
Analysts polled by LSEG expect Boeing to report a smaller fourth-quarter adjusted loss of $481.24 million and revenue of $21.08 billion.
For 2024, analysts expect a profit of $2.66 billion and revenue of about $89.52 billion, with free cash flow of $5.68 billion.