Boeing is behind schedule with new airplane: still needs 'mountain of work'. What does that mean?

Boeing shares fell more than 3 percent in trading on Sept. 11 after CEO Kelly Ortberg announced that certification of the newest 777-9 jetliner had been delayed. The first delivery is now not expected until 2026 - six years later than originally planned. According to the executive, even the smallest delays are causing serious financial damage to the company. Nevertheless, analysts maintain a positive outlook on the stock due to its growth this year.

Boeing's share price fell 3.3% to $219.99 on Thursday, September 11. It became the minimum closing price for two months. At the premarket on Friday, the securities were recovering some of the losses - growing by 0.4%.

Boeing CEO Kelly Ortberg said on Thursday that the company is behind schedule in certifying the 777-9, its newest wide-body airplane, Reuters writes. The executive said the first delivery of the 777X is expected in 2026, six years later than originally planned when the program was launched in 2013.

There is still "a mountain of work" to complete the certification, although no new technical problems have been identified, Ortberg noted. Even a "minor delay in the 777 program has serious financial implications" for the company," the CEO complained. Boeing has already lost several billion dollars on the program, Reuters writes.

Inflationary pressures within Boeing's supply chain have begun to affect airplane costs, Ortberg also said. But he doesn't expect any problems in the chain to derail plans to increase production of Boeing's most in-demand airplane, the 737 MAX jetliner, to 42 planes a month by the end of the year. Volumes are now limited to 38 aircraft, but the company hopes to achieve an increase in the limit. To do that, it needs to reduce the amount of rework already done in the 737 program, Ortberg said.

The company has made major progress on the design changes needed to certify the 737 MAX 7 and MAX 10, the smallest and largest models in the lineup. "It is disappointing that it has taken us so long..." - stated the CEO.

Boeing needs to increase production of the 737 MAX to return to positive cash flow, but the company doesn't want to rush it. "If we have to wait a month, we'll wait. On the scale of the business, a month will not play a role, but the loss of stability will make a difference," the Boeing CEO said.

He recalled that in past years, accelerated production growth has already led to system and supply chain disruptions, costing Boeing billions of dollars and complicating relationships with customers and partners.

Debt repayment will remain a top priority when the company returns to profitability, Ortberg said, recalling that Boeing had to borrow too much to overcome the crises of recent years.

The company's stock is up more than 24% since the beginning of the year, making Boeing the fourth best-performing issuer in the Dow Jones Industrial Average index - behind JPMorgan Chase, Nvidia and Goldman Sachs, notes Investor's Business Daily.

However, the company's shares are down 3% since the start of September, as investors lock in profits after a five-month rally that saw the Dreamliner maker's stock rise 33%, LiveMint writes.

Barclays Investment Bank reaffirmed an Overweight rating on shares of Boeing in Wednesday, September 10 report and a $255 target price. This benchmark is within the general range of analysts' estimates from $150 to $287.

On Wall Street, analysts maintain a Strong Buy consensus rating on Boeing shares, with the stock receiving 18 "buy" and two "hold" recommendations over the past three months, TipRanks adds.

This article was AI-translated and verified by a human editor