Boeing Foresees Q1 Cash Drain Amid Regulatory Scrutiny: Report

Zinger Key Points
  • Boeing reportedly anticipates Q1 Cash outflow to be between $4 billion and $4.5 billion.

Boeing Company BA reportedly anticipates significant cash outflow in the first quarter due to regulatory scrutiny and reduced production of its 737 Max jetliner following a mid-air accident in January.

Cash outflow is projected to be between $4 billion and $4.5 billion for the quarter, with full-year free cash flow expected to be in the low-single-digit billions, below analyst expectations, reported Bloomberg.

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Boeing faces challenges following a 737 Max 9 aircraft fuselage failure earlier this year.

According to the report, CFO Brian West expressed optimism that stability will improve over time but acknowledged the ongoing challenges.

Boeing’s commercial aircraft margins are expected to be negative in the first quarter, with a similar outlook for the full year.

Production rates for the 737 Max will be lower in the first half, gradually increasing later in the year, pending approval from the FAA.

As of March 1, Boeing ceased accepting fuselages from Spirit AeroSystems Holdings Inc SPR that lack required parts or repairs.

The slowdown at Boeing is impacting airlines like Ryanair Holdings Plc RYAAY, which faces delivery delays that affect summer capacity in Europe.

Despite the setbacks, Boeing has sufficient reserves to pay for a possible purchase of Spirit Aero in cash and debt rather than issuing equity, West said, as per the report.

Also ReadBoeing’s Struggles Cast Shadows Across The Skies, Airbus CEO Reportedly Voices Concern

Price Action: BA shares are trading higher by 2.62% at $185.88 on the last check Wednesday.

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