Aerospace giant Boeing reported a loss of $355 million in the first quarter on Wednesday amid reported mechanical problems that resulted in the door blowout of a 737 Max 9 in January.
The loss represented an 8 percent decline year over year, with revenue of $16.6 billion during the period.
The result was better than expected by experts, who had predicted a bigger loss and revenue of $16.2 billion.
Boeing stock was up 3.5 percent in early trading on Wednesday after declining more than 32 percent this year before the mechanical problems began to be reported.
The airplane maker’s cash burn was also lower than expected at $3.9 billion. The company and Wall Street had expected up to $4.5 billion in cash burn.
CEO Dave Calhoun said in a memo to Boeing employees on Wednesday that its supply chain is stabilizing as it deals with safety problems with its 737 Max aircraft.
“Near term, yes, we are in a tough moment,” Calhoun said. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else. We are absolutely committed to doing everything we can to make certain our regulators, customers, employees, and the flying public are 100 percent confident in Boeing.”
Instead of ramping up production as it wanted to, output has been lowered amid restrictions from the Federal Aviation Administration after numerous instances of noncompliance were found during investigations into the problems.
The company produces fewer than 38 Max jets per month, with sharply slower deliveries.
That led to a 31 percent drop in revenue for the commercial airplane unit compared to last year, with negative margins of 24.6 percent, up from 9.2 percent previously.
“We are using this period, as difficult as it is, to deliberately slow the system, stabilize the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term,” Calhoun said. “As these efforts begin to take hold, we’re seeing early signs of more predictable, stable and efficient cycle times in our 737 factory, and expect this will continue to slowly improve.”
The loss translated to 56 cents a share, less than the $425 million or 69 cents per share loss a year earlier. The loss was $1.13 per share when excluding one-time items, including pension costs.
The mechanical problems with the 737 Max line of aircraft led United Airlines to ground its entire fleet of 737 Max 9 craft for three weeks in January, which caused it to lose $200 million in the first quarter.
United reported in a filing last week that it has a confidential agreement with Boeing that will give the airline “credit memos” for future purchases to counter its losses.
Investigators did not find safety problems with United’s 737 Max 9s and returned all but one to service by Feb. 5.
Boeing also paid Alaska Air $160 million in initial compensation after the mid-air door panel blowout.
Calhoun announced in March that he would step down as CEO at the end of 2024 over the crisis. Board chair Larry Kellner and commercial plane unit head Stan Deal have already stepped down and been replaced by Steve Mollenkopf, formerly of Qualcomm, and COO Stephanie Pope.
United said it “continues to root for Boeing’s success and we look forward to working with them during their leadership transition.”
The National Transportation Safety Board found that the panel blowout on the Alaska Air flight was caused by several bolts being removed from the panel and not replaced.
No paperwork showed what had occurred or what happened to the bolts.