# Boeing shares plunge on fresh 777X setbacks, array of charges
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-27
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Boeing Halts 777X Production Through 2023
Meta Description: Boeing announces halting 777X production until 2023 due to delays, costs, and financial challenges, with net debt rising to over $45 billion.
URL: https://financedigest.com/boeing-shares-plunge-on-fresh-777x-setbacks-array-of-chargeshtml

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By Eric M. Johnson and Abhijith Ganapavaram

(Reuters) -Boeing Co said on Wednesday it was halting 777X production through 2023 due to a fresh delay in its entry into service after certification problems and weak demand, with $1.5 billion in added costs for the mini-jumbo program.

Shares of the U.S. planemaker fell 11% to $146.62 in early trading – a nearly 1-1/2 year low – after it posted a quarterly loss and disclosed more than $1.2 billion in [charges linked to supplier](https://www.financedigest.com/tesco-to-charge-online-booker-suppliers-new-fulfilment-charge.html "Tesco to charge online, Booker suppliers new fulfilment charge") costs and technical problems on its Air Force One presidential plane, trainer jet, and the war in Ukraine.

Another dreadful set of results,” [Agency Partners analyst Nick Cunningham said in a client](https://www.financedigest.com/impact-com-ends-2022-with-strong-momentum-driven-by-client-and-agency-partner-growth.html "impact.com Ends 2022 with Strong Momentum Driven by Client and Agency Partner Growth") note, adding that a “general sense of disarray continues” and flagging that net debt rose to a new peak of over $45 billion.

On the plus side, Boeing said it submitted a certification plan to U.S. air-safety regulators in a step toward resuming deliveries of its 787 Dreamliner, halted for [nearly a year by inspections and repairs in an industrial headache costing about $5.5 billion](https://www.financedigest.com/collapsed-ftx-owes-nearly-3-1-billion-to-top-50-creditors.html "Collapsed FTX owes nearly .1 billion to top 50 creditors").

The twin-aisled Dreamliner, along with the 737 MAX, are vital to the [financial health](https://www.financedigest.com/how-can-fintechs-better-engage-zillennials-with-their-financial-health-the-answer-lies-in-speaking-to-them-in-their-own-language.html "How can fintechs better engage Zillennials with their financial health? The answer lies in speaking to them in their own language") of Boeing, which is trying to bounce back from successive crises.

It has been producing the Dreamliner jets at a low [rate while it undertakes inspections and repairs for structural flaws amid](https://www.financedigest.com/stocks-euro-gain-amid-divergent-fed-ecb-rate-hike-outlooks.html "Stocks, euro gain amid divergent Fed, ECB rate hike outlooks") intense regulatory scrutiny.

Boeing has “completed the required work on initial airplanes and is conducting check flights”, Chief Executive Dave Calhoun told employees in a memo on Wednesday, a development that should cheer airlines that have cut back on flying long routes due to [delivery delays](https://www.financedigest.com/airbus-may-delay-some-2023-jet-deliveries-sources.html "Airbus may delay some 2023 jet deliveries: sources").

Boeing did not specify when Boeing would resume Dreamliner deliveries. Reuters reported last week it had advised [key airlines and parts suppliers that the deliveries would resume in the second](https://www.financedigest.com/inflation-in-key-german-states-eases-for-second-month.html "Inflation in key German states eases for second month") half of this year.

Boeing also confirmed [reports of a delay](https://www.financedigest.com/euronext-delays-commitment-of-traders-report-until-further-notice.html "Euronext delays commitment of traders report until further notice") in handing over the first 777X jet to 2025, from the previous target of late 2023, but said it remained confident in the program.

We’ve got to give ourselves the [time and freedom to get this right,” Calhoun told analysts on a call after the company posted](https://www.financedigest.com/whats-the-best-time-to-post-on-instagram.html "What’s the best time to post on Instagram") results.

Calhoun said the halt in 777-9 production was based on a longer safety certification timeline, a [risk reported](https://www.financedigest.com/treasury-and-risk-management-application-market-to-bring-in-revenue-of-us-7-1-bn-by-2028-comprehensive-research-report-by-fmi.html "Treasury and Risk Management Application Market to bring in revenue of US$ 7.1 Bn by 2028 – Comprehensive Research Report by FMI") by Reuters in February.

He said the production pause would help minimize inventory and the number of jets requiring retrofits, while it adds to freighter capacity with a newly launched cargo spinoff of the 777X, the world’s largest twin-engine passenger plane.

We are concerned that this delay (in 777X delivery) may allow airlines to cancel without penalty,” [Citi Research](https://www.financedigest.com/smart-city-kiosk-market-to-reap-excessive-revenues-by-2028-trends-and-forecast-by-fact-mr-investigated-in-the-latest-research.html "Smart City Kiosk Market To Reap Excessive Revenues By 2028 | Trends And Forecast By Fact.MR investigated in the latest research") analyst Charles Armitage said.

Reuters [reported last month that the Federal Aviation Administration had warned](https://www.financedigest.com/uk-report-warns-of-impact-of-islamist-groups-in-prisons.html "UK report warns of impact of Islamist groups in prisons") Boeing that existing certification schedules for the 737 MAX 10 and 777X were “outdated and no longer reflect the program activities.

[Boeing reiterated it expects its 737 MAX production rate](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") to reach 31 planes per month in the second quarter, a slight delay from what some analysts expected, though industry sources have not ruled out a slip.

Calhoun reiterated Boeing was on track to return to positive [cash flow](https://www.financedigest.com/covestro-sees-lower-2023-profit-cash-flow-as-macro-challenges-prevail.html "Covestro sees lower 2023 profit, cash flow as macro challenges prevail") in 2022 as it ramps up deliveries of the 737 MAX cash-cow narrow-body aircraft, with travel rebounding from the pandemic.

“Traffic is returning, and it’s returning in a pretty big way,” Calhoun said.

It reported a [quarterly core](https://www.financedigest.com/ericssons-quarterly-core-profit-misses-expectations.html "Ericsson’s quarterly core profit misses expectations") loss per share of $2.75, compared with a loss of $1.53 per share a year ago. Revenue fell to $13.99 billion from $15.22 billion.

Like other aerospace companies, Boeing is grappling with [supply chain](https://www.financedigest.com/in-the-supply-chain-clean-data-is-the-fuel-of-the-future.html "In the supply chain, clean data is the fuel of the future") shortages, inflation and fallout from the coronavirus pandemic and war in Ukraine.

“Inflation continues to take a hard run at everything we do,” Calhoun told analysts.

It booked a $660 million charge in the quarter on its VC-25B – commonly known as Air Force One – due to higher supplier [costs and technical problems and schedule delays](https://www.financedigest.com/britain-delays-major-rail-project-hs2-as-costs-soar-again.html "Britain delays major rail project HS2 as costs soar again").

It [recorded $367 million in charges for its T-7A Red](https://www.financedigest.com/red-box-recorders-launches-worlds-first-automated-audio-recording-compliance-verification-tool.html "RED BOX RECORDERS LAUNCHES WORLD’S FIRST  AUTOMATED AUDIO-RECORDING COMPLIANCE VERIFICATION TOOL") Hawk trainer jet due to inflation, supply chain issues and impacts related to the pandemic.

It booked pre-tax charges of $212 million due to impacts of the [war in Ukraine and international sanctions against Russia](https://www.financedigest.com/russia-sharply-scales-back-far-east-war-games-with-china.html "Russia sharply scales back Far East war games with China"), which pose risks to materials supply and aircraft orders.

(Reporting by Eric M. Johnson in Seattle and Abhijith Ganapavaram in Bengaluru; Additional reporting by Nishit Jogi from Bengaluru; Editing by Arun Koyyur, Bernadette Baum and Nick Zieminski)


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