Boeing BA-N swung to a fourth-quarter profit on Tuesday, driven by the sale of its digital aviation services provider, as well as rising jet output and stronger deliveries.
The company also recorded a US$565 million charge on its KC-46 aerial-refueling tanker program due to higher estimated production support and supply chain costs.
The sale of Jeppesen for US$10.6 billion covered operating losses in Boeing’s commercial and defense divisions that were larger than some analysts expected. At the same time, the company continued to increase output of its two most popular jetliners - the 737 MAX and 787 - and posted positive free cash flow, a metric closely watched by investors.
Boeing ended the year with 737 MAX production of 42 airplanes per month and is in the process of raising the 787 rate to eight a month. The company plans to raise MAX production to 47 per month this year.
The planemaker earned a net profit of US$8.22 billion, or US$10.23 per share, for the quarter through December, compared with a loss of US$3.86 billion, or US$5.46 per share, a year earlier.
On an adjusted basis, including the Jeppesen sale, Boeing earned a quarterly profit of 32 cents per share compared with expectations for a loss of 39 cents per share. Analysts had not expected Boeing’s results to include the sale.
Despite the production improvements, Boeing’s commercial airplane unit posted a quarterly loss of US$632 million. Boeing’s defense and space unit lost US$507 million. In a CNBC interview on Tuesday, Boeing CEO Kelly Ortberg said he expects the KC-46 charge to be a one-time event.
The company’s shares were down about 1.3 per cent in early trade. The quarterly results included the Jeppesen sale, which was part of Boeing’s services unit, to Thoma Bravo and the reacquisition of Spirit AeroSystems for US$4.7 billion in stock. Boeing paid down Spirit’s debt by more than US$3 billion, resulting in a net gain of about US$7.6 billion.
Boeing’s services unit posted nearly US$1 billion in profit after taking out the Jeppesen sale, Jefferies aerospace investment analyst Sheila Kahyaoglu wrote in a research note.
Across all jet programs, the company delivered 600 airliners last year, the most since 2018. In the intervening years, Boeing was battered by the 737 MAX scandal, the pandemic, supply chain bottlenecks, a mid-air accident that exposed systemic quality and safety problems, and labor problems.
“With progress comes expectations, and our customers and stakeholders are going to expect more from us this year,” Ortberg said in a memo to employees on Tuesday. “And we should expect more from each other.”
He said the company needs to certify the 737-7, 737-10 and 777X and to make progress on fixed-cost defense and space programs that are behind schedule and have cost Boeing billions.
Boeing brought in US$375 million in cash in the fourth quarter, but it still burned US$1.9 billion in cash for the year, in part due to ongoing certification delays on the 737 MAX and 777X programs.
Boeing’s fourth-quarter revenue rose 57 per cent to US$23.95 billion compared with expectations of about US$22.6 billion, according to data compiled by LSEG.