1 hr ago
Boeing Shares Drop as 777X Testing May Extend Into 2027
Boeing is building a large airplane called the 777X.
It has been delayed, and Boeing now says some tests may continue into 2027.
Boeing still says the first deliveries can start in 2027.
A seal on the GE Aerospace engine needs certification, causing a testing challenge.
Investors reacted by selling Boeing shares, which fell sharply.
Boeing’s finance chief said slower deliveries of its 737 and 787 planes could reduce cash generation.
Boeing also said testing for the 737 Max 10 is complete and regulators are reviewing its paperwork.
The company does not expect one large China order to be finalized all at once.
Boeing said some testing of its delayed 777X aircraft may continue into 2027.
The company maintained that 777X deliveries are still expected to begin in 2027.
Boeing blamed the testing challenge on pending certification of a GE Aerospace engine seal.
Boeing shares fell as much as 6% after executives discussed testing and slower deliveries.
The company said exceeding the midpoint of its $1 billion-to-$3 billion free-cash-flow guidance is less likely.
- Who
- Boeing, its Chief Executive Officer Kelly Ortberg, Chief Financial Officer Jay Malave, GE Aerospace, and aviation regulators.
- What
- Boeing said some 777X testing may extend into 2027 while maintaining its planned 2027 delivery start.
- Where
- The comments concerned Boeing’s aircraft programs and its competition with Airbus in the long-haul aircraft market; the share move occurred in New York trading.
- When
- The comments were made Wednesday at a Morgan Stanley investor conference; Boeing expects deliveries to begin in 2027.
- Why
- Pending certification of a seal on the GE Aerospace turbine powering the 777X is creating a testing challenge.
Boeing’s Outlook
Investor Concerns
777X schedule
Boeing’s Outlook
Boeing said deliveries remain on track to begin in 2027 despite some testing potentially continuing into that year.
Investor Concerns
The aircraft is already seven years late, and further testing uncertainty raised concerns about the schedule.
Financial outlook
Boeing’s Outlook
Boeing reiterated its $1 billion-to-$3 billion free-cash-flow guidance for the year.
Investor Concerns
The company said it is less likely to exceed the guidance midpoint because 737 and 787 deliveries are progressing more slowly.
China orders
Boeing’s Outlook
Boeing expects additional orders from China over time.
Investor Concerns
Chief Executive Officer Kelly Ortberg downplayed the prospect of a major order being finalized in one announcement tied to Chinese President Xi Jinping’s planned US trip.
Key facts
- 777X delivery target
- Boeing continues to plan for deliveries beginning in 2027.
- 777X delay
- The model is now seven years late, according to the report.
- Testing issue
- Pending certification of a seal on the GE Aerospace turbine may push some testing into 2027.
- Free-cash-flow guidance
- Boeing reiterated a range of $1 billion to $3 billion for this year.
- Cash-flow outlook
- Boeing’s CFO said exceeding the midpoint of that range is less likely because 737 and 787 deliveries are slower.
- Share performance
- Boeing shares fell as much as 6% and were down 5.3% at 3:11 p.m. in New York; they had declined 8.5% this year.
- 737 Max 10
- Boeing said required flight testing is complete and regulators are evaluating the documentation.
Quotes
Kelly Ortberg
Boeing’s chief executive officer
“That’s probably going to cause us a little bit of a challenge between now and the end of the year. We may see some some of the testing spill into the next year. We’re still planning on 2027 deliveries.”
livemint.com
Sources
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