Boeing delays 777X to 2027, takes $4.9 billion charge as costs mount

[preprodution Boeing 777x at Paine Field, Washington]
NNehring

Boeing (BA [https://seekingalpha.com/symbol/BA]) shares were little changed in premarket trading Wednesday after the planemaker reported [https://seekingalpha.com/news/4510142-boeing-non-gaap-eps-of-7_47-misses-by-5_09-revenue-of-23_27b-beats-by-1_14b] a wider-than-expected quarterly loss and confirmed another delay for its 777X widebody jet, now expected to reach customers in 2027.

777X PROGRAM FACES ANOTHER DELAY

Boeing said it took a $4.9 billion pre-tax charge related to the extended 777X certification schedule, which pushed the first delivery to 2027 from the prior 2026 timeline. That charge—partly tied to customer penalties—brought the total accumulated cost of 777X program delays to roughly $15 billion since its launch in 2013. The jet was originally slated to enter service in 2020.

Chief Executive Kelly Ortberg acknowledged that while the aircraft continues to perform well in flight testing, Boeing (BA [https://seekingalpha.com/symbol/BA]) still has “a mountain of work” to complete before certification.

“While we are disappointed in the 777X schedule delay, the airplane continues to perform well in flight testing,” Ortberg said.

Industry analysts viewed the 777X delay as disappointing but not entirely surprising.

“Boeing’s earnings report showed positive sales development with meaningful increases in commercial, defense and services,” said Dhierin Bechai, investing group leader for _The Aerospace Forum [https://seekingalpha.com/checkout/mp_1087]_.

FINANCIAL RESULTS AND KEY METRICS

The company reported a GAAP loss of $7.14 a share and a core (non-GAAP) loss of $7.47 a share, compared with losses of $9.97 and $10.44 a year earlier, missing Wall Street’s estimate for an adjusted loss of $2.38 a share. Revenue rose to $23.3 billion, topping forecasts of about $22.13 billion as Boeing’s net loss narrowed to $5.34 billion from $6.17 billion last year.

The 30% jump in revenue was driven by a sharp increase in commercial aircraft deliveries to 160 jets, the highest quarterly total since 2018. Boeing (BA [https://seekingalpha.com/symbol/BA]) delivered 55 aircraft in September alone, up from 33 a year earlier when a strike involving 33,000 workers disrupted output.

Operating cash flow turned positive at $1.1 billion, while free cash flow reached $238 million, marking Boeing’s (BA [https://seekingalpha.com/symbol/BA]) first positive free cash flow since 2023. Total company backlog rose to $636 billion, including more than 5,900 commercial airplanes.

737 MAX PRODUCTION GAINS MOMENTUM

After years of production and quality issues, Boeing (BA [https://seekingalpha.com/symbol/BA]) has begun cautiously increasing 737 MAX output. Earlier this month, the Federal Aviation Administration approved the company to raise monthly production to 42 jets, up from a cap of 38 imposed after a January 2024 mid-air panel blowout.

The 737 program has now stabilized at 38 planes per month, and Boeing (BA [https://seekingalpha.com/symbol/BA]) expects the incremental increase to help sustain cash flow and deliveries in 2026.

SEGMENT PERFORMANCE

Commercial Airplanes revenue surged 49% to $11.1 billion, reflecting higher deliveries, though the division posted a $5.4 billion loss due to the 777X charge.

Defense, Space & Security revenue climbed 25% to $6.9 billion, returning to profitability with a 1.7% operating margin—a turnaround Bechai described as a “noteworthy jump and low-digit profit.”

Global Services revenue rose 10% to $5.4 billion, maintaining a strong 17.5% margin supported by increased maintenance and parts demand.

“Noteworthy was the 25% jump and low-digit profit for the defense segment,” Bechai said. “For Commercial Airplanes, the highlights weren’t completely unexpected, but we saw a meaningful increase in sales, confirmation from Boeing that 737 Max production is raised to 42 per month and a $4.9 billion charge on the 777X program as first deliveries are now anticipated in 2027. The addition of a fifth test airplane earlier this year already pointed at a substantial risk to the schedule.”

OUTLOOK

Boeing (BA [https://seekingalpha.com/symbol/BA]) ended the quarter with $23 billion in cash and marketable securities, roughly flat from the previous quarter, and $53.4 billion in debt. While the 777X delay adds to a decade of setbacks for the program, analysts said the company’s strong revenue growth, delivery pace, and renewed cash generation mark tentative signs of recovery.

Ortberg said Boeing’s (BA [https://seekingalpha.com/symbol/BA]) priority remains “stabilizing operations and restoring trust” with customers and regulators as it works to resolve manufacturing issues and complete certification milestones.

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