Earnings Beat on Sales, Miss on Profit
Boeing's latest quarterly report is a mixed bag - and it shows exactly where the company's headaches are hiding. Boeing lost $428 million for the quarter, though that is an improvement over the $612 million loss it posted a year ago.
The main reason for the miss?
A $280 million charge tied to the Air Force One program. Boeing is building two new 747 jets for the president, and they are taking longer and costing more than planned. As CEO Kelly Ortberg told staff, "While we're making progress on our development programs, you're never done until you're done."
The good news is that cash flow is heading in the right direction. A year ago, the company was burning $200 million.
Air Force One and the Production Puzzle
The delayed Air Force One jets are a clear drag, but they are not the only big project on Boeing's plate. The company delivered 171 commercial planes in the second quarter, up 14% from 150 a year earlier. The workhorse 737 Max is now rolling off the line at a rate of 47 per month, and Boeing plans to push that number higher.
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Still, development programs are expensive. The next big milestone is certification of the 737 Max 7, a smaller version of the Max family. After that, Boeing will likely face questions about the Max 10 and the new 777X wide-body jet. Those are multiyear efforts that require heavy spending upfront.
Ortberg acknowledged the pressure in a note to staff: "While two quarters don't make a year, if we work together and stay focused on safety, quality and on-time performance - we'll improve our competitiveness and set ourselves up for a big second half." He also told CNBC that getting the Air Force One done on time is a top priority. "It's very important to our customer that we deliver that airplane on time. We're gonna put more resources on to make sure that we do that."
The catch: more resources usually means more cost before it means more revenue.
What This Means for Your Portfolio
For investors, the story here is about patience. Boeing is still in the messy middle of fixing its production lines, clearing regulatory hurdles, and finishing projects that should have been done years ago. The Air Force One charge is a reminder that these legacy problems are not fully behind the company.
On the other hand, the improving cash flow is a real signal. Free cash flow is the lifeblood for a company like Boeing, which needs money to fund new planes and pay down debt. Turning a predicted cash burn into over $600 million in positive cash is a big swing.
Looking ahead, Boeing still expects to deliver the first new Air Force One jet in 2028. That is years away, but it is a fixed deadline that forces the company to keep investing. Meanwhile, the certification pipeline for the Max 7, Max 10, and 777X will be key milestones that could either lift or weigh on the stock.
For anyone holding Boeing shares or thinking about buying, the quarter is a decent reminder of the trade-off. The business is growing again - more planes, more revenue, better cash flow. But the earnings are still being pinched by the costs of getting there.
That is not a reason to panic or to pile in. It is just where the company is right now.
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