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Boeing on Jan. 25 reported its fourth quarter and full-year financial results for 2022, which showed that the U.S.-based aerospace giant is on a path to recovery — following years of challenges brought on by the Covid-19 pandemic, two fatal 737 Max crashes, and manufacturing flaws with the 787.
Company president and CEO Dave Calhoun said Boeing had a “solid fourth quarter,” generating “more than $3 billion in free cash flow” — which helped the company “generate positive full-year free cash flow for the first time since 2018.”
He noted that this is an “important metric” in Boeing’s recovery, and attributed the company’s success in the fourth quarter to its progress in performance and “strong demand” across Boeing’s portfolio of aircraft.
In Q4/22, Boeing reported revenue of $20 billion — up from $15 billion in Q4/21 — which accounted for nearly one-third of the company’s full-year revenue of $66 billion — up from $62 billion in 2021.
Throughout 2022, Boeing delivered 480 commercial airplanes and recorded 808 net orders, and the company’s total backlog grew to $404 billion — including over 4,500 commercial airplanes. In the fourth quarter alone, the company secured net orders for 376 aircraft — 200 of which came from United Airlines, which placed an order for 100 737 Max and 100 787 aircraft.
The 737 line of aircraft led deliveries in both the quarter and the full year, with 110 and 387 of the type delivered, respectively. By the end of 2022, the 737 Max fleet had surpassed 3 million flight hours since its return to service in late 2020, following a 20-month grounding of the aircraft.
Boeing said it is stabilizing the production rate of the 737 at 31 aircraft per month, “with plans to ramp production to approximately 50 per month in the 2025/2026 timeframe.”
The 787 Dreamliner program, on the other hand, is maintaining a low production rate (less than five aircraft per month), after the Federal Aviation Administration ordered Boeing to pause Dreamliner deliveries in May 2021 for roughly 15 months — due to manufacturing issues that could have compromised the 787’s structural integrity.
Boeing got the green light to resume 787 deliveries in August 2022, and was able to deliver 31 of the type through the remainder of the year. The company plans to ramp up production to five per month later this year, and 10 per month in the 2025/2026 timeframe. Also noteworthy is the fact that Boeing booked 787 orders with six separate customers in the fourth quarter.
In the defense segment, Boeing’s fourth-quarter revenue was $6.2 billion, with an operating margin of 1.8 percent — which the company said “reflects the continued operational impact of labor instability and supply chain disruption.” Full-year revenue was down 13 percent from 2021, at $23 billion.
However, Boeing achieved some important milestones in the fourth quarter, including delivering the first P-8A Poseidon to New Zealand and completing engine testing for the T-7A program. The company delivered 45 defense aircraft in the fourth quarter, and 160 in the full year.
While Boeing has made progress towards recovery, Calhoun acknowledged that there are still several hurdles that lie ahead.
In its financial results report, Boeing noted that it is continuing to work towards certification of the 737 Max 7, 737 Max 10, and 777X aircraft.
Boeing was initially facing a deadline of December 2022 to certify the Max 10, but certification of that airplane is dependent on some Max 7 documentation — meaning the Max 7 must achieve certification before the Max 10 can.
As part of new legislation that was passed in 2020 following two 737 Max crashes, any airplane certified after Dec. 31, 2022, must comply with new FAA safety regulations regarding the types of alerts that pilots receive when something goes wrong in flight. If Boeing could not certify the Max 7 and Max 10 before the end of 2022, the company would be required to redesign and upgrade the crew alerting system on both types — further delaying their entry into service.
However, in late December 2022, Congress agreed to waive the deadline for certification of the Max 7 and Max 10 — meaning Boeing will be able to certify the planes under pre-2023 requirements, on the condition that the plane-maker retrofit the entire Max fleet (including the Max 8 and 9) with two fixes that would improve the flight control system. Boeing will have three years after the Max 10 achieves certification to complete the retrofits, and will incur all the associated costs.
As for the 777X, Boeing confirmed in early 2022 that it expects the first delivery of the 777X to take place in 2025 — a significant delay from the initial 2023 target — due to the time needed to meet certification requirements. The company has opted to pause production of the type through 2023 to “minimize inventory and the number of airplanes requiring change incorporation,” Calhoun said.
The 777X, also known as the 777-9, was first introduced in 2013, but experienced numerous problems and delays over the years and did not achieve its first flight until January 2020. In October 2022, an issue with the plane’s GE9X engine was discovered, and flight testing was paused until December.
“This will be another important year for us as we look to steadily increase our production rates, further improve performance, progress in our development programs, and deliver on our commitments,” said Calhoun.
“We have more work ahead to drive stability in our operations and within the supply chain. . . . Through it all, we will keep safety, quality, and transparency at the forefront.”
Boeing’s full-year 2023 outlook shows $4.5 to $6.5 billion of operating cash flow and $3 to $5 billion free cash flow (not prepared using Generally Accepted Accounting Principles).