Boeing announced on Wednesday, October 29, that the delivery of its new 777X has been delayed from 2026 to 2027 due to regulatory obstacles, resulting in a $4.9 billion non-cash charge in the third quarter.
The charge represents expenses or losses that have occurred but have not been paid, as well as anticipated expenses, estimated and recorded in the books in advance.
Despite the setback with the new 777X model, Boeing mentioned that the restrictions on production for its main aircraft, the 737 MAX, have been eased by the government, indicating a potential improvement in the company’s operations.
Boeing’s CEO, Kelly Ortberg, had warned at an investor conference in September that the Federal Aviation Administration’s (FAA) certification process for the wide-body long-range 777X had taken longer than expected, leading to order backlogs and delays in deliveries promised to airlines as early as 2020.
Each delivery delay further extends the period for Boeing to recoup its investments in the 777X project.
Ortberg emphasized in a letter to employees on Wednesday that their primary focus moving forward is to push for the certification and delivery of development projects.
In the meantime, other segments of Boeing’s business have been showing gradual improvement. During the quarter, Boeing delivered a total of 160 commercial planes, marking a significant increase in production compared to the previous year’s low levels.
Furthermore, the FAA has started relaxing production oversight for Boeing’s two existing models (737 MAX and 787 Dreamliner), authorizing company staff to audit certain safety inspection processes, though the FAA will still directly issue airworthiness certificates required for each model to carry passengers.
This month, the FAA also approved Boeing’s increase in the monthly production rate of 737 MAX from 38 to 42 planes, a crucial step for Boeing to fulfill its accumulated orders for narrow-body passenger jets.
Ortberg pledged in a statement that their team will continue to operate under FAA supervision to ensure that each plane meets all safety and certification standards.
Boeing’s third-quarter financial report showed a $6 billion loss, including a $5.1 billion impact from delays in the delivery of the 777X and 767 aircraft programs, while revenue surged by 30% to $23.3 billion, reflecting a sharp increase in commercial aircraft deliveries.
For the first time, Boeing achieved positive cash flow this quarter. Free cash flow reached $2.38 billion, marking the first quarterly positive value since 2023.
The defense business department, covering weapons, fighter jets, and spacecraft, also turned from losses to profits, with revenue jumping by 25% to $6.9 billion. The company mentioned that the increased demand for new satellite contracts and Patriot missile interception system components is enhancing the outlook for this department.
However, the St. Louis area factory of Boeing experienced a shutdown for almost two months this quarter, with about 3,200 defense department employees on strike since early August.
The strike began on August 4. The leadership of the International Association of Machinists and Aerospace Workers (IAM) District Lodge 837 requested Boeing to raise the contribution rate for the 401(k) retirement plan and increase the one-time signing bonus to nearly $12,000, a level close to the amount Boeing offered last year to union members in the company’s commercial aircraft division in the Pacific Northwest who went on strike.
On October 28, Boeing’s defense department head, Steve Parker, wrote to the company’s employees stating that the company will not deviate from the basic contract terms and urged employees to cross the picket line.