Update 6 - Boeing shares plunge as 737 output falls short of expectations and free cash flow outlook remains weak

Complete rewrite, with analyst commentary added in paragraphs 3-4, production outlook for the 737 model added in paragraphs 7-10, updates on the 777-9 program in paragraph 13, and an updated headline.

Dan Catchpole/Shivansh Tiwary

Reuters, Seattle, October 27 - Boeing BA.N CEO Kelly Ortberg said on Tuesday the company would not be able to meet its 737 production and jet delivery targets this year, dealing a setback to its recovery process and sending shares tumbling nearly 10% for their worst single-day performance in more than 18 months.

The company also pushed back its forecast for free cash flow growth by a year. According to data from London Stock Exchange Group (LSEG), Boeing now expects free cash flow of $3 billion next year, compared to the $5.5 billion consensus forecast from analysts.

While many aerospace companies are struggling to ramp up output, Boeing is recovering from years of sustained crises and controversies (link) that have tarnished its reputation, depleted its cash, and saddled it with heavy debt.

Tony Gabelli, an investment analyst at Gabelli Funds, said that although Boeing’s long-term prospects remain strong due to robust passenger jet demand and just one major competitor—Europe’s Airbus AIR.PA—this may lead investors to be more inclined to sell the stock.

He stated that the market will punish any delays in boosting cash flow. In the most recent quarter, Boeing’s free cash flow was $464 million; so far this year, the company has burned $359 million in cash.

According to data compiled by the London Stock Exchange Group (LSEG), Boeing reported an adjusted loss of 34 cents per share in the quarter ended September, compared to analyst expectations for a loss of 21 cents per share.

In midday trading, Boeing shares fell 9.6% to $170.23, marking the worst day for the stock since April 3, 2025.

Production Challenges

Boeing now expects to reach its goal of producing 47 737 aircraft per month by early 2027. As recently as May, Boeing executives said they expected to hit this pace by the summer of this year (link).

As a result, Boeing will not meet its target of delivering 500 aircraft this year, CFO Jay Malave said during a call with analysts on Tuesday.

Ortberg said during the call that wing production remains the main bottleneck, but Boeing still plans to increase monthly output to 52 planes in the second half of 2027.

Deliveries of this hugely popular single-aisle jet are the main driver for Boeing’s cash flow. Before Ortberg joined Boeing in 2024, the company had sacrificed quality in a rush to ramp up production, resulting in years of manufacturing issues.

Despite pressure to accelerate 737 output growth, Ortberg said: “We will approach this wisely and with discipline. The outlook is optimistic.”

As Reuters first reported on Friday (link), the company still faces production challenges on the 787 program and the 777 freighter.

Boeing expects the 777-9 to receive regulatory certification as planned by mid-2027. The company said it will still have negative cash flow next year.

Quarterly Loss Exceeds Expectations

The bleak outlook and a quarterly loss beyond expectations overshadowed important achievements Boeing made in recent months.

In the quarter, Boeing received certification from U.S. regulators for the 737 MAX 7 (link), won the U.S. Navy’s sixth-generation F/A-XX fighter contract (link), and generated positive free cash flow for consecutive quarters; in addition, the larger MAX 10 model was certified in October.

“Expectations from the market are rising, and deservedly so. We have a stronger foundation than a year ago, but there’s still more work to do to clear our backlog, reinforce our culture, and improve day-to-day operations,” Ortberg said in a memo to staff following the earnings release.

Revenue at Boeing’s Commercial Airplanes segment fell slightly to $10.7 billion, with an operating loss of $697 million and operating margin of -6.5%, down from -48.3% a year earlier.

The company attributed performance to lower-margin commercial deliveries and higher production costs, including supply chain expenses.

Boeing’s Defense unit saw nearly $500 million in quarterly profit and an operating margin of 6.2%, up from 1.7% a year earlier, driven by higher deliveries, improved operations, and a $252 million subsidiary divestiture.

Boeing Global Services earned $1 billion with an operating margin of 18.3%.

The U.S. planemaker finished the quarter with net debt of $25.2 billion, down slightly from $25.9 billion at the end of the prior quarter and $30.4 billion a year ago.

(To assist non-native English speakers, Reuters has provided this report with automated translations into several other languages. Due to potential inaccuracies or lack of contextual nuance in automated translations, Reuters does not guarantee the accuracy of these translated texts. They are provided solely for reader convenience. Reuters accepts no liability for any damage or loss caused by use of automated translation features.)