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Loss of factory that made fasteners for jets threatens Boeing’s plan to get production back on track; ‘We’ll get through it,’ CEO says
The fire at SPS Technologies, in Abington Township, Pa., broke out Feb. 17 and took several days to extinguish.
A fire tore through an airplane-parts factory last month in suburban Philadelphia, decimating the century-old plant. Boeing BA -0.17%decrease; red down pointing triangle has been racing ever since to size up whether it will delay the jet maker’s turnaround plans.
Equal in size to about 10 football fields, the factory, operated by a Berkshire Hathaway BRK.B 0.02%increase; green up pointing triangle company, was the sole supplier of some critical fasteners used in Boeing planes. Fallout from the blaze now threatens the aerospace company’s effort to get its manufacturing operations back on track.
Boeing is searching to find alternative suppliers, but replacing the parts isn’t an easy task. Many might look like typical bolts, but the fasteners must be manufactured to hold up to the demands of air travel, and some of the designs are complex. They are used in jet engines, landing gear and other parts of the plane.
The plant’s loss won’t have an immediate effect on production, the company said, but suppliers and analysts expect fallout as Boeing works through its parts supply.
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European plane maker posts higher revenue and profit for the first quarter
Airbus posted higher revenue and profit for the first quarter, backed its goal to deliver more planes this year than in 2023 and decided to increase production of its A350 wide-body jets, extending its lead over beleaguered rival Boeing.
The European plane maker confirmed its target to deliver about 800 commercial aircraft to customers this year, more than the 735 planes it dispatched in 2023.
Airbus’s optimism that deliveries will keep growing comes as Boeing grapples with the fallout from an Alaska Airlines emergency landing in January after a door plug ripped away in midair, prompting a temporary grounding and immediate inspections of Boeing 737 MAX jets.
Airbus handed 142 planes to customers in the first quarter, up nearly 12% versus a year ago. Boeing, on the other hand, delivered just 83, a 36% drop from a year ago.
The U.S. company, under pressure from airlines and regulators to ensure safety and quality in its production processes, reported a net loss and declining revenue in the first quarter, showing diverging fortunes with Airbus.
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The European plane maker said that it will book charges of about €900 million in the first half of 2024
Airbus said it won’t be meeting its annual targets for the year, including the number of commercial aircraft it planned to deliver, after its space-systems management team identified further commercial and technical challenges.
The European plane maker on Monday said that it will also book charges of about €900 million ($962.5 million) in the first half of 2024 following an extensive review of its space-systems programs.
Airbus expects to end the year delivering 770 commercial aircraft, down from a prior outlook of 800 commercial aircraft deliveries a couple of months ago.
The company said its A320 ramp-up trajectory has been adjusted to reflect specific supply-chain challenges in a degraded operating environment, and that its target production rate of 75 A320 Family aircraft a month is now set to be reached a year later, in 2027.
Airbus also forecasts adjusted earnings before interest and taxes of about €5.5 billion, below the €6.5 billion to €7 billion expected previously.
Airbus’s free cash flow before customer financing expectations have also been lowered to €3.5 billion from €4 billion, the company said.
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Machinist strike and Pentagon projects sap manufacturer’s cash flow. Boeing lost roughly $4 billion in the most recent quarter, when the jet maker was hit by a debilitating strike, suffered mounting losses in troubled U.S. government projects and incurred costs tied to sweeping job cuts rolled out at the end of the year.
The manufacturing giant warned investors that it generated less revenue and racked up bigger losses than Wall Street anticipated. Thursday’s warning came before Boeing was scheduled to release its full results on Tuesday. Shares fell in after-hours trading.
The $4 billion expected loss includes big write-downs on money-losing projects for the Pentagon and in the company’s commercial jet business. Wall Street had expected Boeing to book a roughly $1 billion quarterly loss for the period.
Boeing said it expects to report revenue of $15.2 billion for the latest quarter, compared with Wall Street’s forecast of $16.6 billion. Its operations had negative cash flow of $3.5 billion in the December quarter, coming in slightly better than investors had feared.
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