Boeing (BA) CFO Brian West is now expecting the aerospace manufacturer’s cash burn rate to be much higher than expected for its first quarter of 2024 amid investigations into the 737 Max jetliner, he disclosed at a conference.
Yahoo Finance Live discusses Boeing’s biggest headwinds as airline operators continue to wait for their Boeing orders.
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Editor’s note: This article was written by Luke Carberry Mogan.
Video Transcript
SEANA SMITH: We are also watching shares of Boeing this morning, a top trending ticker on Yahoo Finance. The move to the downside here, off just about 1.5%. Now, CFO Bryan West is saying at a Bank of America conference that Boeing expects cash burn in the first quarter to be higher than they planned back in January. They’re now seeing a cash burn rate of somewhere between $4 and $4.5 billion.
Now, this comes as Boeing and its major supplier Spirit AeroSystems are under scrutiny following the January 5 Alaska Airlines incident. And of course, we’re seeing the pressure on the stock here today. And Brad, I was going through quick analyst reaction to this news and obviously not a massive surprise. I think the degree though of that cash burn rate in terms of what we are expecting– what Boeing is experiencing here in the current quarter of just about $4 to $4.5 billion, I think how quickly they are able to recover from this is the critical factor here in the fact that they are no longer too confident or they’re saying they’re not going to reach their cash flow goals here until the end of their initially projected range.
BRAD SMITH: Yeah, I think for Boeing as well in the immediate cash burn that they’re anticipating and now having to communicate to the Street. They’re speaking, of course, today. Bryan West is at the B of A Global industrials conference.
It’s also going to come with a larger mindset of how does this impact orders in the future, orders that number one, for some airlines, they’re waiting to receive and perhaps the exercising of some of those options to purchase additional ones now hampered. And then even further out from that, new contracts that you would sign at places like the Paris Air Show, places that– the Dubai air show, all of these key points where a Boeing leans on some of the existing relationships that it has with the airline operators who some of them cutting back on the capacity, cutting back on the routes in this near term period of time because that means that they’re going to have to keep more aircraft in circulation for longer until they take on some of the newer ones that they had anticipated getting by 2025 in some instances. For Delta, that’s now pushed back to 2026, 2027.
And so as those schedules are pushed back, that also impacts some of the orders that Boeing sees come through. In the near term though, you’ve got analysts saying that maybe Airbus is a viable trade here. So that is something that we’ll continue to watch and where the dust settles there as well.
