Massive 787 Dreamliner charge sees Boeing posts third consecutive heavy annual loss

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Having only just finished weathering the 737 MAX storm which cost Boeing Co. an estimated US$21 billion in documented costs plus the cancellation of over 1,000 orders, the North American planemaker has been hit a further financial blow, this time relating to its 787 Dreamliner and continued quality control issues.

Having delivered only 21 of the jets in 2021 and none since June of last year, Boeing has had to pay US$3.5 billion in compensation to customers, while the delays have increased the cost of production by US$2 billion. As a consequence, Boeing has taken nearly US$4 billion in charges directly related to the 787 Dreamliner, resulting in the company posting a net loss of US$4.3 billion for the financial year 2021. The result is an improvement of the previous year’s loss of US$11.9 billion, but far worse than analysts had predicted.

The situation has snot been helped by the fact the 787 Dreamliner was designed for the long-haul market and international travel is expected to be the last sector of the industry to recover from the negative effects of the COVID-19 pandemic. Having sold 119 787 Dreamliners in 2019, Boeing managed just 21 orders throughout 2021. “We are taking the time now to ensure we’re positioned well as widebody demand recovers,” said Boeing CEO Dave Calhoun in his memo to employees.

The good news is that the company had a positive cash flow for the last quarter of 2021, the first time since the first quarter of 2019 when the problems with the 737 MAX began. “We have been focused relentlessly on improving our free cash flow situation” Calhoun told investors on a conference call Wednesday. “It has been our #1 metric. And to be able to achieve that, I think, is terrific news.” Boeing shares dropped nearly 4% in Wednesday morning trading on the results. (£1.00 = US$1.35 at time of publication).

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