Boeing investors seek answers after latest 737 production glitch

When it releases its first quarter financial results on Wednesday, Boeing Co (BA.N) is anticipated to discuss whether the most recent 737 MAX manufacturing issue will hinder the American aircraft manufacturer’s yearly goals for passenger jet deliveries and free cash flow.

Investors are screaming for information on the scope of the issue, which Boeing says affects a “significant” number of the 737 fleet and involves two brackets that were placed incorrectly.

The manufacturing issue, according to analysts, isn’t a deal-breaker for the MAX because it doesn’t pose a safety risk, and in-service jets have continued to fly despite it. But Boeing hasn’t provided much information to Wall Street regarding the problem it plans to fix or the overall financial impact.

“I’d like to have some numbers and some scale of the materiality of this, whether it affects deliveries, cash flow, and all the rest,” said Vertical Research Partners analyst Robert Stallard. “Unfortunately, it’s just one of many problems that Boeing seems to run into frequently.”

The main uncertainty is whether Boeing would revise its financial forecast for 2023, which expects for it to deliver at least 400 737 MAX aircraft and produce $3 to $5 billion in free cash flow this year. Both objectives might still be feasible, according to J.P. Morgan analyst Seth Seifman.

Seifman stated that it would be “surprising” if the firm were unable to achieve its objective. “Boeing gave a fairly wide range for the amount of cash flow they expect for the year, and there are a lot of levers to impact cash throughout the company,” he added.

The business has already delivered 111 MAXs in its first quarter, which is generally the slowest financial quarter of the year, and might make its yearly goal if modifications can be completed fast, despite the fact that it is “more likely” that Boeing will cut its 737 MAX delivery forecasts, according to Seifman.

Investors can question Boeing CEO Dave Calhoun about how many MAXs are affected by the issue, how much it will cost to correct it, and when it will be fixed.

Boeing will not alter its current plans to boost MAX production this summer, Calhoun stated last week. But because of the company’s stalled 737 MAX deliveries, the summer flight schedules of airlines will lose almost 9,000 seats as a result of the delivery delay.

Boeing is also anticipated to announce a new charge for the KC-46 tanker program that is anticipated to be less than $500 million due to a 767 fuel tank problem.