Boeing stems cash outflow as aircraft deliveries advance

Boeing Co managed to almost halt its cash burn in the second quarter, indicating that a turnaround initiated by chief executive officer Kelly Ortberg a year ago is paying off as the company delivers more aircraft.The planemaker generated cash from operations for the first time since 2023 and consumed just $200mn in free cash flow during the three months, far less than the $1.8bn analysts had expected. The company also reported a smaller-than-expected loss for the quarter as well as revenue that beat estimates.Boeing is emerging from one of the toughest periods in its recent history, including a near-catastrophic accident at the start of 2024 and a debilitating strike in the final months. The crises squeezed the company’s finances and spurred Boeing to sell equity worth almost $24bn. Ortberg, an aerospace veteran, came out of retirement last year to lead the revival."We’re just over halfway through 2025 and I’m pleased with our progress,” Ortberg said in a message to employees. "Change takes time, but we’re starting to see a difference in our performance across the business.”Over the course of last year, the company burned through more than $14bn in cash. Since then, aircraft orders have become an important negotiation tool in US tariff negotiations, with President Donald Trump tying many trade accords to Boeing plane orders. That, in turn, has supported Boeing’s business.The US manufacturer has won more orders so far this year than Airbus SE, its European rival. Boeing’s defence business was profitable for a second consecutive quarter, while its commercial jet deliveries are rising as its factories settle into a steadier production tempo. Boeing delivered 280 aircraft in the first half, the most in the first six months of a year since 2018.The improvement in Boeing’s cash performance so far this year puts the planemaker on a course to generate positive free cash flow over the back half, a milestone closely watched by analysts given the company’s $53.3bn total debt load."Obviously, that’s a huge positive because they have to generate cash to put the company’s balance sheet back in good shape,” said George Ferguson, an analyst with Bloomberg Intelligence. "That’s a sign of health.”Second-quarter sales grew 35% from a year ago to $22.75bn, Boeing said in a statement, about $1bn more than analysts predicted. The company recorded an adjusted loss per share of $1.24, better than the expected $1.40 loss.The earnings included a $445mn cost to settle a US criminal case related to two fatal crashes of its 737 Max jets, although a Texas court hasn’t yet approved the agreement between Boeing and the Justice Department.But the turnaround led by Ortberg is still in the early stages, and far from assured given the company’s debt load and tumultuous end markets. The Boeing CEO confirmed that certification of the final two 737 Max models, the -7 and -10, will likely slip into 2026 as the company works on a redesign of an anti-ice system for the jets engines.Boeing has been making 737 jets at a 38-jet monthly pace since May, but will need approval from the Federal Aviation Administration before raising output to 42-jets pace, a step the company will seek to request "soon,” Ortberg said.Monthly production of the larger 787 Dreamliner model has been raised to a seven-jet monthly rate, Ortberg said, up from its previous five jets-a-month clip.The planemaker has invited new FAA Administrator Brian Bedford to visit its Seattle factories "in a week or so,” Ortberg said in an interview on CNBC.Boeing’s commercial business narrowed its loss from a year ago, while the defence division earned $110mn operating profit and didn’t record any accounting charges. The company is seeing improved performance in the fixed-price development programs responsible for the worst of the overruns, Ortberg said.Still, the division’s recovery faces a new threat after more than 90% of workers in St Louis voted to reject a company offer and go on strike. The two sides are in a cooling-off period, but haven’t yet resumed contract talks.But any strike by defence workers likely wouldn’t have the same sweep as last year’s sweeping shutdown stemming from a strike by Boeing’s Seattle Machinists union, which is about 10 times larger."This isn’t going to derail our recovery,” Ortberg told CNBC.Boeing’s global services division continues to be the company’s most profitable, notched 19.9% margins and an operating profit of $1.05bn. The company didn’t provide any detailed financial guidance for the year, continuing its practice since a global grounding of the 737 Max plunged it into crisis in 2019."This is probably one of the best quarters Boeing’s had in a long time, but the company’s not taking a victory lap,” said Ron Epstein, an aerospace analyst at Bank of America. "There are more steps to take.”