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Bond Market News

Boeing Takes a Hit with $1.2bn in Losses

April 28, 2022

Boeing reported a Q1 2022 net loss of $1.2bn vs. a $561mn loss during the same period last year. Its revenues came at $14bn, declining 8% YoY, driven by lower defense volume and charges on fixed-price defense development programs. The company stated that it had $212mn of pre-tax charges for impacts of the war in Ukraine. Operating cash flows were negative at -$3.2bn. The company expects positive cash flows for 2022. Boeing has a total backlog of $371bn including nearly 4,200 commercial airplanes. The company also reported about $2.7bn in charges and added costs across its aircraft portfolio, and highlighted concerns about its jet delivery targets due to technical problems, inflation, and supplier risks. Boeing halted 777X production (the  twin-engine jet) till 2023 due to weak demand and certification problems causing a delay in its entry into service. It posted $367mn in charges for its T-7A Red Hawk trainer jet citing pandemic impacts, inflation, and supply chain issues. Boeing noted that the 737 production rate continues to increase and is expected at 31 airplanes per month during Q2. Regarding US Air Force One, where Boeing lost $1.1bn on the contract, David L. Calhoun President, CEO & Director said “Air Force One I’m just going to call a very unique moment, a very unique negotiation, a very unique set of risks that Boeing probably shouldn’t have taken. We’re going to recognize the cost associated with it.”

Boeing’s dollar bonds were trading lower , its 3.5% 2039s were down over 4.5 points to 78.59 yielding 5.46%.

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