Boeing shares rally despite heavy fourth-quarter loss

Boeing reported a significant fourth-quarter loss on January 28, following a difficult 2024, but shares surged amid optimism that early signs of a turnaround under a new CEO could yield results.

The company announced a loss of US$3.9 billion as the company continued to suffer from the effects of a more than seven-week labour strike that shut down two major assembly plants.

However, Chief Executive Kelly Ortberg, who joined Boeing in August, stated that the company is making progress, according to CNBC.

Company officials indicated that they anticipate increasing 737 MAX production in 2025 and clearing out planes currently in inventory, which would enhance the outlook for free cash flow later in the year.

Boeing has collaborated with the Federal Aviation Administration (FAA) on “an agreed-upon path for rate increases” on the 737 MAX, Ortberg informed analysts.

The FAA has restricted Boeing’s MAX production to 38 planes per month while maintaining stringent oversight of the company following two fatal MAX crashes in 2018 and 2019 that resulted in the deaths of over 300 people. Analysts consider restoring production to this level and subsequently increasing output as critical to Boeing’s profit outlook

The FAA will only approve an increase in production if Boeing continues to demonstrate progress on safety concerns.

Boeing’s fourth-quarter loss brought its full-year loss—its sixth consecutive annual deficit—to US$11.8 billion. The results were in line with a January 23, profit warning, in which Boeing highlighted the impact of the labour strike on its operations.

A 31% decline in fourth-quarter revenues to US$15.2 billion reflected a downturn in aircraft deliveries, which were barely a third of the level recorded in the same period in 2023 due to the labour stoppage halting production of the 737 MAX and the 777.

Boeing’s performance was further tarnished by a troubling incident in January 2024, when an Alaska Airlines-operated 737 MAX was forced to make an emergency landing after suffering a mid-flight blowout of a door plug.

Following this event, Boeing has faced heightened scrutiny from US aviation regulators and slowed production.