Boeing Co. (BA) experienced a significant downturn in its fourth-quarter financial performance, reporting a non-GAAP loss of $5.90 per share, well below the Street’s consensus expectation of $3.22 loss per share. Despite this, BA’s stock saw a modest rise of 0.46% to $175.97 in pre-market trading. The company’s revenue for the quarter was $15.24 billion, down nearly 31% year-over-year, aligning with their earlier guidance but falling short of the $15.68 billion expected by analysts.
A series of challenges impacted these results, including a work stoppage by the International Association of Machinists (IAM), charges related to defense programs, and costs linked to workforce reductions. Operating cash flow was negative at $3.5 billion, with free cash flow at ($4.1) billion, indicating significant cash burn.
CEO Kelly Ortberg emphasized efforts to stabilize operations and enhance safety and quality, aiming to recover performance and rebuild trust with stakeholders. Despite the financial setbacks, there are signs of operational recovery. The Commercial Airplanes segment saw its revenue plummet by 55% to $4.76 billion, with a negative operating margin of 44%, primarily due to the IAM work stoppage and subsequent charges on the 777X and 767 programs. However, positive steps include resuming production of the 737, planning production rate increases, and the 787 program maintaining a production rate of five per month with expansions planned for South Carolina.
The 777X program’s resumption of FAA certification flight testing in January and the anticipated first delivery in 2026 are bright spots for the company. Moreover, the Commercial Airplanes division managed to secure 204 net orders in the quarter, bolstering a backlog of over 5,500 airplanes valued at $435 billion.
In the Defense, Space & Security segment, revenue decreased by 20% to $5.4 billion with a (41.9%) operating margin, yet it captured significant awards including 15 KC-46A Tankers and seven P-8A Poseidon aircraft for the U.S. military. The segment’s backlog stood at $64 billion, with a notable 29% of orders from international customers, highlighting diversification in defense contracts.
Conversely, the Global Services segment showed resilience with a 6% revenue increase to $5.12 billion and an operating margin of 19.5%, driven by higher commercial volume and favorable product mix. This segment secured additional contracts for C-17 sustainment and F-15 upgrades, indicating robust demand for maintenance, repair, and overhaul services.
Boeing’s mixed results reflect a company navigating through significant operational and financial challenges while making strategic moves to stabilize and grow. The focus on operational improvements, particularly in safety and quality, alongside strategic contract wins, suggests a path towards recovery, though the journey will likely be marked by continued volatility as the company addresses its core issues and capitalizes on its backlog.
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