Boeing’s quarterly profits slump while new industrial problems emerge

While Boeing continues to struggle with the grounding of its popular 737 MAX jet, the American planemaker is seeing other problems surface as it decides to reduce production numbers of its 787 Dreamliner. Beyond either further reducing output of the 737 MAX or even halting production completely, plans for the production of a successor to the 777 mini-jumbo, codenamed NMA, are also being delayed.

According to Boeing CEO Dennis Muilenburg, the company is now targeting early 2021 for the first delivery of the 777X, and sees a total of three 777-program deliveries per month in 2020, verses 3.5 per month set in 2019. Despite these revelations, shares in Boeing rose 1% to US$340.28 at midday trading on Wednesday, October 23. Analysts believe that the cut in 787 production to 12 units per month, scheduled for 2020, is tied to the current U.S. trade war with China and that situation could easily be resolved in the near future. Boeing has reported a 53% drop in quarterly profit and a negative free cash flow of US$2.89 billion in the quarter, compared with a positive free cash flow of US$4.10 billion a year earlier. Core operating earnings fell to US$895 million or US$1.45 per share, from US$1.89 billion or US$3.58 per share, a year earlier.

Boeing is also undergoing a management restructuring which has so far seen CEO Dennis Muilenburg stripped of his role as board chairman and, on Tuesday, October 22, Kevin McAllister, the commercial airplanes division’s top executive, was also ousted. However, as CEO, Muilenburg remains in the crosshairs for any further revelations regarding the 737 MAX.

The Federal Aviation Authority is currently demanding an explanation as to why text messages from a former Boeing Pilot describing erratic behaviour of the 737 MAX simulator software were not allegedly revealed to regulators until last week and also what the content of those messages was implying.  

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