Boeing Q4 2021 results demonstrate 737 MAX recovery, 787 rework, record freighter aircraft sales

Boeing’s (Chicago, Ill., U.S.) Q4 2021 results report revenue of $14.8 billion, reflecting higher commercial volume and lower defense revenue. Generally accepted accounting principles (GAAP) loss per share of $7.02 and core loss per share (non-GAAP) of $7.69 reflect lower charges and higher commercial volume. Boeing recorded operating cash flow of $0.7 billion. Full-year (2021) revenue reached $62.3 billion, with a total backlog of $377 billion and the addition of 535 net commercial orders.

“2021 was a rebuilding year for us as we overcame hurdles and reached key milestones across our commercial, defense and services portfolios. We increased 737 MAX production and deliveries, and safely returned the 737 MAX to service in nearly all global markets [including progress in China]. As the commercial market recovery gained traction, we also generated robust commercial orders, including record freighter sales. Demonstrating progress in our overall recovery, we also returned to generating positive cash flow in the fourth quarter,” says David Calhoun, Boeing president and CEO. “On the 787 program, we’re progressing through a comprehensive effort to ensure every airplane in our production system conforms to our exacting specifications. While this continues to impact our near-term results, it is the right approach to building stability and predictability as demand returns for the long term. Across the enterprise, we remain focused on safety and quality as we deliver for our customers and invest in our people and in our sustainable future.”

According to Boeing, cash and investments in marketable securities decreased to $16.2 billion, compared to $20.0 billion at the beginning of Q4 2021, primarily driven by debt repayment partially offset by operating cash flow. Debt was $58.1 billion, down from $62.4 billion at the beginning of the quarter due to the prepayment of a term loan and repayment of maturing debt. Total company backlog at quarter-end was $377 billion.

 

Segment results

Commercial Airplanes

Fourth-quarter revenue increased slightly to $4.8 billion primarily driven by higher 737 deliveries, partially offset by lower widebody deliveries and less favorable mix. Fourth-quarter operating margin was primarily driven by a charge on the 787 program.

Boeing says it is continuing to make progress on the global safe return to service of the 737 MAX. In December 2021, the Civil Aviation Administration of China issued an airworthiness directive outlining changes required for Chinese airlines to prepare their fleets to resume service. Since the Federal Aviation Administration’s (FAA) approval to return the 737 MAX to operations in November 2020, more than 300,000 revenue flights have been completed, and the reliability of the 737 MAX fleet is said to remain above 99% (as of Jan. 24, 2022). The 737 program is currently producing at a rate of 26 per month and continues to progress towards a production rate of 31 per month in early 2022. The company is evaluating the timing of further rate increases.

Moreover, the company continues to perform rework on 787 airplanes in inventory and is engaged in detailed discussions with the FAA regarding required actions to resume deliveries. In the fourth quarter, the company determined that these activities will take longer than previously expected, resulting in further delays in customer delivery dates and associated customer considerations. Accordingly, Commercial Airplanes recorded a $3.5 billion pre-tax non-cash charge on the 787 program. The program is producing at a very low rate and will continue to do so until deliveries resume, with an expected gradual return to five per month over time. The company now anticipates 787 abnormal costs will increase to approximately $2 billion, with most being incurred by the end of 2023, including $285 million recorded in the quarter.

Commercial Airplanes secured orders for 164 737 MAX and 24 freighter aircraft. Commercial Airplanes delivered 99 airplanes during the quarter and backlog included more than 4,200 airplanes valued at $297 billion.

 

Defense, Space and Security

Fourth-quarter revenue decreased to $5.9 billion and fourth-quarter operating margin decreased to 4.4%, primarily due to lower volume and less favorable performance across the portfolio, including a $402 million pre-tax charge on the KC-46A Tanker program.

During this quarter, Defense, Space and Security secured an award for six MH-47G Block II Chinook helicopters for the U.S. Army Special Operations, a contract extension for Future Logistics Information Services for the U.K. Ministry of Defence, an award for modernization of Airborne Warning and Control System to the Royal Saudi Air Force, and contracts for proprietary space programs. Defense, Space and Security also completed the first carrier tests for the MQ-25 unmanned aerial tanker and started flight testing on the second uncrewed Loyal Wingman aircraft.

Backlog at Defense, Space and Security was $60 billion, of which 33% represents orders from customers outside the U.S.

Global Services

Revenue increased to $4.3 billion and fourth-quarter operating margin increased to 9.3% primarily driven by higher commercial volume and favorable mix. Operating margin was negatively impacted by a $220 million inventory impairment.

During the quarter, Global Services secured a V-22 performance-based logistics contract for the U.S. Marine Corps, was awarded a contract for F/A-18 Landing Gear Repair for the U.S. Navy and was selected to provide Apache training and support services to the U.K. Ministry of Defence. Global Services also delivered the 50th 767-300 converted freighter.

For additional financial information within each segment, visit the report.