Boeing faces big questions over deliveries of Max planes

Spirit's Belfast factory under focus amid reports of Boeing takeover

The blowout has led to a management shake-up with investors keen to see who will take over from CEO Dave Calhoun. Picture: AP/J. Scott Applewhite

Tough questions await Boeing when it announces its results on Wednesday, including on potential chief executive candidates, talks with Spirit AeroSystems, and slumping 737 Max jet output, while its quarterly report is expected to show a surge in cash-burn rate.

The US plane maker, which is reeling from a safety crisis sparked by a mid-air door plug blowout on a 737 Max 9 jet in the US on January 5, is also expected to report its first revenue fall in seven quarters.

Boeing's shares have dived more than 33% this year, while shares of its main rival. Europe's Airbus are up about 15%.

"I don't think anyone's going to be shocked by pretty bad (results)," said Tony Bancroft, portfolio manager at Gabelli Funds. He expects the company to reiterate messages stressing safety.

The US Federal Aviation Administration, or FAA, has imposed a production cap on Boeing of 38 jets a month following the blowout, blamed on an assembly error. But the monthly output rate is fluctuating well below this level and in late March fell as low as single digits.

Analysts have warned the slow pace of deliveries risks delaying Boeing's financial and production goals. It already has had implications on growth plans by its major worldwide customers, including Ryanair, which has a large number of outstanding undelivered planes from the manufacturer.

"The longer the FAA's oversight pressures monthly aircraft deliveries on production, the more challenging it would be for Boeing to meet its 2025/2026 aircraft production and $10bn (€9.3bn) free cash flow targets," Morgan Stanley analyst Kristine Liwag said.

Boeing is aiming to produce 50 737s and 10 787s a month in that timeframe, which it sees as key milestones as it works to accelerate its recovery from an earlier crisis after two Max jets crashed in 2018 and 2019.

The door plug blowout has led to a management shake-up with investors keen to see who will take over after outgoing chief executive Dave Calhoun leaves at the year end.

Spirit chief executive Patrick Shanahan, along with GE Aerospace chief Larry Culp, have been floated, among others, as possible successors to Mr Calhoun. None have said they are pursuing the job.

Mr Calhoun's successor will likely be tasked with integrating Spirit if a deal to acquire the 737 fuselage supplier is completed.

Price remains an obstacle to a deal. Spirit's Belfast factory which makes the wings for the Airbus A220 jet, for example, is losing money.

- Reporting by Reuters and Irish Examiner