BOEING on Wednesday (Apr 24) reported its first quarterly revenue drop in seven quarters, but the US planemaker beat Wall Street expectations that were lowered after a January mid-air blowout of a cabin door prompted it to slow production of its strongest-selling jets.

Boeing said its first-quarter cash burn, a metric closely watched by investors, was US$3.93 billion, better than average analyst expectations of a cash burn of US$4.49 billion.

In March, Boeing indicated it would use between US$4 billion and US$4.5 billion due to a crisis following the Jan 5 accident involving a nearly new 737 MAX 9 jet.

The company’s shares, which have sunk 35 per cent year to date, were up 3.6 per cent in volatile premarket trading after its loss per share was narrower than expected.

“Well it could have been worse. While the loss and the cash outflow are not as bad as feared, the company is still clearly facing some serious challenges in the Commercial Aircraft division that will take some fixing,” Vertical Research Partners analyst Robert Stallard said in a note.

Since the Jan five accident on an Alaska Airlines-operated jet, the US Federal Aviation Administration (FAA) has imposed a cap on production of Boeing’s strong-selling 737 MAX jets. The FAA also has told Boeing to develop a comprehensive plan to address “systemic quality-control issues.”

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Before the report, CEO Dave Calhoun, who will step down around year end, said in a letter to employees on that Boeing was “in a tough moment”, slowing the system to improve quality and safety.

“Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else,” he added.

Reuters reported this month that output of Boeing’s cash-cow 737 MAX had fallen sharply as US regulators stepped up factory checks.

Analysts have warned the slow pace of deliveries could delay Boeing’s financial and production goals. Boeing’s CFO said last month the company needs more time to hit a goal outlined in 2022 for an annual cash flow of about US$10 billion by 2025 or 2026.

The goal is seen as a key milestone as Boeing works to accelerate its recovery from an earlier crisis after two MAX jets crashed in 2018 and 2019.

The company also expects a slower increase in the production rate and deliveries of its 787 widebody jets due to supplier shortages “on a few key parts,” a memo showed on Monday.

Yet with production constrained at Boeing and its rival Airbus, demand remains strong, though the European planemaker increased its lead in the narrowbody market in the first quarter.

Calhoun said Boeing would have “largely delivered” its inventory of 737s and 787s by the end of the year, bringing in much-needed cash. He added that its defence business, which has been losing money in recent quarters, “will be progressing towards more historical levels of performance.”

Operating margins at Boeing’s defence business rebounded to 2.2 per cent in the quarter from a negative 3.2 per cent a year ago, thought it still lost US$222 million on certain fixed-price development programmes that have dogged the business in recent quarters.

Boeing delivered 67 737s in the quarter through March, down 41 per cent from last year. Planemakers receive the bulk of the cash upon delivery of the aircraft.

Combined with compensation Boeing had to pay airlines for the temporary grounding of MAX 9 aircraft, margins at its commercial airplanes business deteriorated to negative 24.6 per cent from negative 9.2 per cent.

Overall adjusted loss per share narrowed to US$1.13, beating expectations of loss per share of US$1.76, as per LSEG data.

Quarterly revenue was US$16.57 billion, which beat expectations of US$16.23 billion. REUTERS