Problem-plagued Boeing sets ambitious turnaround targets

By DAVID KOENIG
AP Airlines Writer

Boeing officials vowed Wednesday to significantly increase airplane production and cash flow in the next few years as the company seeks to recover from two deadly crashes and years of mistakes in its airline and defense businesses.

Boeing said it expects to boost revenue to $100 billion and generate $10 billion in annual cash flow by 2025 or 2026. That upbeat forecast is based on raising production of its best-selling plane, the 737 Max, from 31 to 50 per month and moving beyond billions of losses in fixed-price contracts for the Pentagon.

Two Max crashes that killed 346 people, production flaws with a bigger plane, the 787, bad military contracts and other missteps have left Boeing chasing its European rival Airbus for supremacy in aircraft manufacturing.

“Do I think we’ve given up leadership in this industry? Not for one minute,” declared CEO David Calhoun at an investor day meeting with analysts in Seattle.

Shares of Arlington, Virginia-based Boeing Co. rose 5% in afternoon trading. They had fallen 29% this year through Tuesday, compared with a 19% decline in the Standard & Poor’s 500 index.

Boeing last recorded $100 billion in revenue in 2018. The first of the Max crashes occurred in October of that year, followed more than a year later by the pandemic, and accompanied by cost overruns to build training jets, refueling tankers, a space vehicle and new Air Force One presidential jets for the government.

Last week, Boeing reported a $3.3 billion third-quarter loss on disappointing revenue and huge charges for the government programs. Its debt stood at $57 billion, up from $19 billion in mid-2019.

Company officials said at the investor presentation that they can generate cash instead of burning more of it this year. Calhoun ruled out issuing new stock — which would dilute the value of current shares – to pay down debt.

To hit its goals – the first financial guidance Boeing has offered since 2019 – the company will have to dramatically boost production and delivery of the Max and the 787, both of which have been held up for extensive periods in recent years to fix design and manufacturing flaws.

Boeing is under pressure to come up with a successor to the 737, a workhorse of short, domestic routes that is more than 50 years old. Calhoun said it won’t build a new model until the middle of next decade because the technology for such a plane is still evolving.