Boeing just turned a rare profit. Its problems may be coming to an end

(CNN) — Boeing just announced the end of years of deep financial losses, a turnaround for a company after nearly seven years of bad news.

The US aircraft maker reported $8.2 billion in net profit in the fourth quarter, its first profitable period in more than three years thanks to the sale of a unit that made airline software. This is only Boeing’s third quarterly profit since early 2019, which was the beginning of a 20-month grounding of its 737 Max planes following two fatal crashes that killed 346 people. The pause contributed to $47 billion in total core operating losses for Boeing.

But this profitable quarter is not a one-off. Analysts forecast the company will make money going forward as it ramps up production. Over the past year, the Federal Aviation Administration has eased up 737 Max production caps that had been in place due to safety concerns. Boeing also recently outpaced rival Airbus in new plane orders for the first time since 2018, a turning point for a company that, despite problems, is a key part of the US economy.

CEO Kelly Ortberg said in a statement Tuesday that the company is setting up momentum to fully restore “Boeing to the iconic company we all know it can be.”

Boeing is the United States’ largest exporter, one of only two suppliers of full-size jets to both the US and global airline industries and a key US military contractor. Boeing has 10,000 suppliers across 50 states and estimates its annual contribution to America’s economy at $79 billion, supporting 1.6 million jobs directly and indirectly.

But Boeing has been in a slump for years, largely due to problems of its own making.

First, its profit took a hit from the 737 Max grounding, then the pandemic slowed sales. Things took a turn for the worse two years ago when a door plug blew off an Alaska Air 737 Max shortly after take-off, renewing questions about the safety of its manufacturing and put federal restrictions on the pace of production.

“They still have work to do, but they have made very strong progress,” said Richard Aboulafia, managing director of AeroDynamic Advisory, an industry consultant.

For example, while Boeing is outpacing Airbus in orders, it’s trailing in deliveries of completed jets. Deliveries are more important than new orders, financially, since payment comes when the planes are delivered.

Boeing also still needs approval from the FAA to certify two new versions of the 737 Max and its next widebody jet, the 777X, all of which are years behind schedule. And it faces a possible strike this fall at its Washington state factories from the Society of Professional Engineering Employees in Aerospace, which could shutter production.

Boeing also needs to break through on sales to airlines in China, a crucial market.

Orders there ground to a near halt in 2017 due to rising trade tensions between the United States and China during President Donald Trump’s first term. There have been reports a massive sale to China could be announced soon but has not yet materialized.

“There’s two kinds of problems – problems of their own making, and all that other stuff,” Aboulafia said.

He said Boeing has made progress on the first part, but when it comes to things like Chinese trade relations and certification of the new jets, “who knows? There’s just so much they can do.”

The-CNN-Wire
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