Boeing shares plunge 10.7pc as cautious production outlook disappoints investors

On October 28, Boeing shares plummeted by 10.7% as cautious production growth plans left investors dismayed, making the aviation giant the worst performer in the Dow index. The company's leaders disclosed on a conference call that it expected 737 MAX output to only reach 52 aircraft per month by the second half of 2027. This slower pace is a stark contrast to what investors had anticipated, the reason behind the significant drop in Boeing's value.

Boeing's CEO, Kelly Ortberg, defended the company's approach, stating that they were making "slow but steady" progress and that it was more important to achieve predictability in wing production and fuselage manufacturing at its Kansas operation. Ortberg also hinted at when the company would achieve US$10 billion in annual free cash flow, predicting it would happen in 2029.

The news of the production slowdown came after Boeing reported a third-quarter loss of US$116 million, a stark contrast to the loss of US$5.3 billion in the same quarter last year. The losses primarily stemmed from delays in certifying the 777X, Boeing's latest long-range, wide-body commercial jet. Despite this, Ortberg pointed to the FAA's certification of the 737 MAX 7 and 737 MAX 10, as well as a significant Pentagon award for the US Navy's next-generation fighter jets, as signs of progress.

Revenues climbed 4% to US$24.2 billion, driven by higher defense, space, and security business sales and increased Boeing Global Services. However, commercial aircraft deliveries dipped to 161 units, one more than the previous year. Ortberg expressed confidence in the 777X's certification and projected deliveries of 10 to 15 next year.