Planemaker Boeing swings to quarterly profit on sale, despite unit losses

By Dan Catchpole and Nathan Gomes

SEATTLE, Jan 27 (Reuters) – Boeing swung to a fourth-quarter profit on Tuesday, driven by the sale of its digital aviation services provider, as well as rising jet output and stronger deliveries.

Losses in its two biggest divisions were bigger than expected and dampened investors’ reaction. The company also recorded a $565 million charge on its KC-46 aerial-refueling tanker program due to higher estimated production support and supply chain costs.

But Boeing continued to increase output of its two most popular jetliners – the 737 MAX and 787 – and posted positive free cash flow, a metric closely watched by investors. The $10.6 billion sale of Jeppesen, which closed in the fourth quarter, ensured Boeing ended the year profitable, despite ongoing losses in Boeing’s commercial and defense divisions.

“While Boeing appears to be on its firmest footing since the company’s troubles began in 2018, the quarterly results served as a reminder of the complications of managing this business,” Third Bridge analyst Peter McNally said in an email.

737 MAX OUTPUT REACHES 42 A MONTH

Boeing ended the year with 737 MAX production of 42 airplanes per month and is in the process of raising the 787 rate to eight a month. The company plans to raise MAX production to 47 per month this year and 787 production to 10 a month.

The planemaker earned a net profit of $8.22 billion, or $10.23 per share ($9.92 per share for core operations), for the quarter through December, compared with a loss of $3.86 billion, or $5.46 per share, a year earlier. 

After excluding the Jeppesen sale windfall, Boeing posted a much larger loss than the 39-cent loss per share projected by analysts, according to data compiled by LSEG. 

Despite the production improvements, Boeing’s commercial airplane unit posted a quarterly loss of $632 million. Boeing’s defense and space unit lost $507 million. In a CNBC interview on Tuesday, Boeing CEO Kelly Ortberg said he expects the KC-46 charge to be a one-time event.

The company’s shares were down 2.3% in midday trading.

The quarterly results included the reacquisition of Spirit AeroSystems for $4.7 billion in stock. Boeing paid down Spirit’s debt by more than $3 billion.

The company did not give financial projections for 2026. On a conference call with analysts, Chief Financial Officer Jay Malave said he expects $1 billion to $3 billion in positive free cash flow this year, depending on ongoing delays on the 777X program and the smallest 737 MAX variants – the 737-7 and 737-10.   

MOST DELIVERIES SINCE 2018

Across all jet programs, the company delivered 600 airliners last year, the most since 2018. In the intervening years, Boeing was battered by the 737 MAX scandal, the pandemic, supply chain bottlenecks, a mid-air accident that exposed systemic quality and safety problems, and labor problems.

Malave added the planemaker expects to deliver 500 737s this year, compared to last year’s 447, which included 55 jets that had been in storage. The company aims to hand over between 90 and 100 787 jets this year, up from 88 in 2025.

The company is “seeking to better manage (delivery) delay exposure in new contracts with tighter underwriting standards,” he said on the conference call.

Despite Boeing’s mercurial relationship with President Donald Trump since he took office a year ago, Ortberg said, “the administration has been accessible to us, has listened to our concerns when we’ve had them, and I think we’ve ended up with pretty good outcomes so far.”

The planemaker brought in $375 million in cash in the fourth quarter, but it still burned $1.9 billion in cash for the year, in part due to ongoing certification delays on the 737 MAX and 777X programs. 

“With progress comes expectations, and our customers and stakeholders are going to expect more from us this year,” Ortberg said in a memo to employees on Tuesday. “And we should expect more from each other.”

Boeing discovered a “potential durability issue” on the GE engines powering its new widebody 777X, and is working with the engine maker to fix it, Ortberg said during the conference call, adding that he does not expect it to delay deliveries in 2027.

“We have an on-wing inspection program in place to support Boeing while we analyze the issue and define the corrective action, guided by our safety and quality systems,” a GE Aerospace spokesperson said in a statement. 

Boeing’s fourth-quarter revenue rose 57% to $23.95 billion compared with expectations of about $22.6 billion, according to data compiled by LSEG.

(Reporting by Nathan Gomes in Bengaluru and Dan Catchpole in Seattle; Editing by Anil D’Silva, Rod Nickel)