An American Airlines Boeing 737 MAX 8 flight from Los Angeles approaches for landing at Reagan National Airport shortly after an announcement was made by the FAA that the planes were being grounded by the United States in Washington, U.S. March 13, 2019.
Joshua Roberts | Reuters
Boeing said on Wednesday it would burn more cash in the first quarter than previously expected as it limits 737 production to improve quality amid a worsening crisis at the U.S. planemaker.
CFO Brian West said Boeing would produce less than 38 737 aircraft per month, which is the maximum it can produce under the Federal Aviation Administration’s imposed limit.
Shares of the company were down 3% before the bell.
Manufacturing quality at both Boeing and supplier Spirit AeroSystems is facing increased scrutiny following a Jan. 5 incident in which a door plug blew off a 737 MAX 9 plane mid-flight.
“We’re deliberately going to slow to get this right,” West said in a Bank of America conference. “For years, we prioritized the movement of the airplane through the factory over getting it done right, and that’s got to change.”
He added that Boeing’s cash burn in the first quarter will be somewhere between $4 billion and $4.5 billion, “higher than we originally planned back in January.”
The cash burn is due to a combination of lower deliveries, lower production volumes at its commercial division as well as some working capital pressure.
West added that Boeing would only take deliveries of fully conforming fuselages from Spirit.
On a possible buyout of Spirit, West said Boeing would fund any deal by a mix of cash and debt, rather than using stock.
Source Agencies
