The balance of deferred production costs still on Boeing’s books from the Dreamliner’s troubled start rose by $124 million in the quarter to $14.9 billion, reversing years of declines.
Executives had warned earlier this year that cutting production below a pace of five jets a month could clip margins and force the 787 program into a reach-forward loss. But the company didn’t take the steep accounting charges that some analysts had predicted.
Calhoun and Stan Deal, Boeing’s Commercial Airplanes chief, face a difficult juggling act as they try to get production running smoothly without adding to the stockpile of hundreds of undelivered planes, mostly wide-body 787 jets and narrow-body Max aircraft.
The jetliner division pared its operating loss to $472 million from a deficit of $2.76 billion loss a year earlier, when the company wrestled with the worst of the Covid-19 crisis. Commercial revenue more than doubled to $6.02 billion as deliveries rose.
Boeing is now manufacturing sixteen 737 Max jets a month and still plans to increase output to 31 a month by early next year. Inventories for the division declined by about $330 million to $70.7 billion during the quarter.
“The big picture is: Defense, global services make up for commercial,” where sales were lighter than estimated, according to Bloomberg Intelligence analyst George Ferguson. He expects revenue to be affected near-term by a spate of 737 Max deliveries to Southwest Airlines Co., which used credits to lower its cash payments.
The cash that would typically be generated by the Max has been depressed by low production volumes since U.S. regulators cleared the plane’s return last year after a 20-month grounding prompted by the two fatal crashes.
Boeing isn’t netting much cash by clearing its inventory of the aircraft, either. Airlines are mostly using credits, both for advances already paid to the planemaker and compensation for the grounding, Agency Partners analysts Nick Cunningham and Sash Tusa said in a Tuesday report.©2021 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.