Boeing shares drop nearly 10% on 737 production delay and weaker cash flow forecast
Boeing CEO Kelly Ortberg said the company will miss its 737 production and delivery targets, sending shares down 9.6%. Free cash flow growth outlook was pushed back, with next year's forecast at US$3 billion versus analyst consensus of US$5.5 billion, according to LSEG data.
Boeing CEO Kelly Ortberg said on Tuesday that the company will miss its 737 production and jet delivery targets this year, dealing a setback to its recovery and sending shares tumbling nearly 10 per cent, their worst day in more than 18 months.
The company also pushed back its free cash flow growth outlook by a year. It now expects US$3 billion next year, rather than the analyst consensus for US$5.5 billion, according to LSEG data. Boeing posted free cash flow of US$464 million in the most recent quarter; for the year so far it has burned through US$359 million in cash.
While many aerospace companies are struggling to increase output, Boeing is recovering from years of crises and controversies that dented its reputation, drained cash and saddled it with a heavy debt load. That may make investors more inclined to sell shares, even though Boeing's long-term outlook remains good due to high demand for jetliners and only one major competitor, Europe's Airbus, said Tony Gabelli, an investment analyst with Gabelli Funds investment group.
Boeing reported an adjusted loss of 34 cents per share for the quarter through September, compared with expectations for a loss of 21 cents, according to data compiled by LSEG. Shares were down 9.6 per cent to US$170.23 in afternoon trading, which would be the stock's worst day since 3 April 2025.
Boeing now expects to reach its 737 production rate target of 47 jets a month in early 2027. As recently as May, Boeing executives said they would hit that pace this summer. As a result, Boeing will not reach its 500-jet delivery target this year, the company's financial chief Jay Malave said during a conference call with analysts on Tuesday. Wing production continues to be a major constraint, but Boeing still plans to increase to 52 jets a month in the second half of 2027, Ortberg said on the call.
Despite pressure to increase 737 output faster, "we're going to be smart about this, stay disciplined, and the outlook is there," Ortberg said. The company continues to struggle with production challenges in its 787 program and 777 freighters. Boeing expects the 777-9 jetliner will be on track for regulator certification by mid-2027. It said it will continue to burn cash next year.
The US planemaker ended the quarter with US$25.2 billion in net debt, down from US$25.9 billion at the close of the previous quarter and US$30.4 billion a year ago.