Boeing Announces Leadership Change and Q2 Financials

During Boeing Company’s (NYSE ticker: BA) second quarter 2024 earnings call, the aerospace leader highlighted both challenges and advancements. Outgoing CEO Dave Calhoun announced the appointment of Kelly Ortberg as his successor, set to take over on August 8th.

The company reported a loss per share of $2.90, alongside disappointing results in its Defense, Space & Security segment. Despite these setbacks, Boeing is prioritizing improvements in production stability and safety.

CFO Brian West conveyed that Boeing generated revenue of $16.9 billion while experiencing a free cash flow usage of $4.3 billion. Additionally, Boeing is pursuing the acquisition of Spirit AeroSystems, which is anticipated to be finalized in mid-2025.

### Key Takeaways
– Dave Calhoun introduced Kelly Ortberg as the new CEO, effective August 8th.
– Boeing is focusing on safety and quality, having submitted a comprehensive plan to relevant authorities.
– The company recorded a loss per share of $2.90 and a free cash flow usage of $4.3 billion.
– Boeing Commercial Airplanes delivered 92 planes, generating revenue of $6 billion.
– Boeing Defense & Space reported $4 billion in orders and $6 billion in revenue, a 2% decrease.
– Boeing Global Services saw a 3% increase in revenue, reaching $4.9 billion.
– At the end of the quarter, Boeing had $12.6 billion in cash and marketable securities against $57.9 billion in debt.
– Production rates are projected to increase to 38 aircraft per month in the latter half of the year.
– The acquisition of Spirit AeroSystems aims to enhance quality and safety.

### Company Outlook
– Boeing expects to deliver most 737 MAX airplanes by year’s end.
– Plans are underway to resume production at a rate of five 787s per month by year-end.
– The company targets an increase to a production rate of 38 aircraft per month later in the year.
– Near-term liquidity pressures and higher cash usage are expected.
– Boeing is committed to prudent management of its balance sheet and enhancing business performance.

### Bearish Highlights
– The performance of Boeing Defense, Space & Security was underwhelming, with a 2% drop in revenue.
– Acknowledgment of losses from fixed-price development contracts, with a strategy to recover to high single-digit margins.
– The company faces challenges with working capital pressures and inventory accumulation.

### Bullish Highlights
– Improvements in production metrics—such as reduced “traveled work” and cleaner fuselages—indicate positive progress.
– Backlogs for defense and services total $59 billion and $19 billion, respectively.
– Confidence in the strong backlog for the 777X program, with expectations for positive cash flow following delivery.

### Misses
– Reported a loss per share of $2.90.
– The 787 program continued to struggle with production delays stemming from lower rates, seat delays, and delivery timing issues.

### Q&A Highlights
– Executives are optimistic about ramping up production to meet targets.
– Customer advance payments are being applied, though some are deferred until delivery performance improves.
– Ongoing labor negotiations are being handled with the intent to avert a strike.
– The company is closely collaborating with suppliers to maintain operational stability.

Boeing’s earnings call illustrated a company in transition, with leadership changes and strategic acquisitions aimed at enhancing its quality and safety commitment. The financial results mirrored the hurdles faced in the aerospace sector while also spotlighting areas for improvement and growth potential. As Boeing addresses the intricacies of production, certification, and labor relations, the market anticipates how the incoming CEO, Kelly Ortberg, will guide the company in future quarters.