By Chris Isidore, CNN Business
Updated: Wed, 27 Oct 2021 19:34:35 GMT
Source: CNN Business
Boeing's 737 Max troubles are improving, the company's quarterly results released Wednesday showed — but it's facing a host of other problems.
The aircraft maker increased production of the Max to 19 a month in the third quarter, up from 16 a month in the quarter prior. The company added that it "continues to progress towards a production rate of 31 per month in early 2022."
That's good news for the Max, which was grounded for 20 months in 2019 and 2020 following two crashes that killed 346 people. It was approved to fly passengers in the United States late last year and is now in service in most of the world except China, a key market for air travel.
But other issues continue to loom for Boeing for the company. Getting production of both the Max and the Dreamliner back to normal is key for Boeing's recovery from the Covid-fueled decimation of air travel — and the news about the Dreamliner isn't good.
In July it halted deliveries of the 787 Dreamliner after disclosing the plane's fuselage did not meet precise standards set by the Federal Aviation Administration. The problem was not enough to ground planes already in service, but it caused the second halt in deliveries less than a year.
Boeing said Wednesday it has cut production of the 787 Dreamliner to only two a month, down sharply from the five each month that it was building earlier in the year. The company also disclosed that 105 of the Dreamliners are completed but not delivered, which is signifcant because the company gets most of its revenue from airlines at delivery.
The Dreamliner's quality problems will result in a total of $1 billion of unanticipated costs. It booked $183 million of those costs in the most recent quarter.
Boeing CEO Dave Calhoun has said that he believes the company has "a clear line of sight to the steps ahead," to gain approval from the FAA to resume Dreamliner deliveries, and that most of the issues are "in the rearview mirror for us." But it is uncertain when deliveries will resume, he added.
Airlines also have less need for a long-haul widebody jets such as the Dreamliner -- used primarily on international flights -- since so much overseas travel remains grounded by the pandemic. So in addition to working to get approval from the FAA, Boeing is negotiating with customers to see when they will accept the jets they have on order.
Boeing's problems with the Max are not completely behind it, either.
The company has 370 of the 737 Max jets ready to be delivered, even though those deliveries resumed late last year. It had 450 of those planes on hand when the FAA approved a resumption of passenger flights last year, and it expected to deliver half of them by the end of 2021. But now Boeing is unlikely to hit that target, and its new goal is to deliver "most" of the planes by the end of 2022.
While the company as gotten orders for 679 Max jets since the grounding ended, that hasn't made up for the more than 1,000 orders for the plane canceled since the grounding.
And China still hasn't approved the plane to fly passengers there; roughly a third of the jets in Boeing's inventory are destined for China.
Boeing also took a $185 million charge for the latest problems with its Starliner space capsule program designed to take astronauts and perhaps space tourists to the International Space Station. The company revealed in August problems with its propulsion system are worse than initially anticipated, putting yet another lengthy delay on the horizon. A second uncrewed orbital test flight is now anticipated in mid-2022, the company said.
Overall the company reported core operating income of $59 million. That's isharply lower than the $755 million it made in the second quarter — but much better than the $754 million it lost a year earlier. Its adjusted net loss for the quarter was $350 million, worse than analysts expected.
Shares of Boeing, a Dow component, were narrowly lower in early afternoon trading