Connect with us

Business

Boeing posts quarterly loss on 787, Starliner problems

Published

on

October 27, 2021

By Sanjana Shivdas and Eric M. Johnson

(Reuters) – Boeing Co reported a quarterly loss on Wednesday as charges and expenses on its problem-plagued 787 Dreamliner and Starliner spacecraft programs dampened a ramp-up in 737 MAX deliveries amid rebounding air travel.

The 737 MAX and 787 jetliners are integral to Boeing’s ability to recoup billions of dollars in lost sales from the pandemic and move beyond the safety scandal caused by two fatal crashes, while its Starliner has fallen behind dominating space rival Elon Musk’s SpaceX.

Advertisement

The U.S. planemaker reported a net loss of $132 million, compared with a loss of $466 million a year ago, but eked out a small core operating profit of $59 million, pushing shares up fractionally to $210.52 against a slightly lower Dow Jones Industrial Average.

“It’s important we enter (next year) with a decent trajectory. I feel like we’re on it,” Chief Executive Dave Calhoun said in an interview with CNBC.

Calhoun told employees earlier that Boeing was still muscling through many engineering, production and safety certification problems across its aircraft portfolio. Those issues have been magnified by a severely weakened supply chain, weak international travel demand and the 737 MAX jet’s continued grounding in China.

On the 787, Boeing said it incurred abnormal costs of roughly $1 billion – or $183 million in the quarter – due to inspections and repairs over the last two years from structural defects embedded in the aircraft, confirming for the first time a price tag reported by Reuters in February.

It has twice halted 787 deliveries, with the latest stoppage ongoing since May and resulting in an inventory of more than 100 jets worth $9 billion cash. Calhoun said he could not say when 787 deliveries would resume as Boeing works through forensic inspections and repairs to jets, and supplier problems.

Advertisement

“Simple maths and the $1bn anticipated cost would suggest that it is going to be another ~3-4 quarters before the rate gets back to 5/month,” Vertical Research Partners analyst Rob Stallard said.

Boeing also booked a charge of $185 million on its long-delayed Starliner astronaut capsule it is developing under NASA’s Commercial Crew Program, due to delays and repairs from faulty fuel valves that sidelined the spacecraft after its last flight attempt in August.

Meanwhile, SpaceX’s Dragon capsule has ferried astronauts and supplies to orbit four times.

Revenue rose 8% to about $15.3 billion, fueled by 737 MAX deliveries and growth in Boeing’s services unit as it sees recovery in the air travel market.

Boeing also said it was building 19 of its 737 MAX jets per month, up from the 16 last quarter, with ongoing plans to push to 31 per month in early 2022.

Advertisement

On the prospect of ramping to 50 or more jets monthly, Calhoun said, “The wild card in this one isn’t demand. It’s all about the supply chain. Whether it’s two, three or four years, I’m not sure. I do think we get there.”

The company delivered 62 of its 737s in the quarter, the most since the first quarter of 2019 when the second of two fatal crashes grounded the plane worldwide and lurched Boeing into a crisis long overtaken by the global pandemic.

It also said it has been producing about two jets monthly at its South Carolina factory with plans to go back to an already slow rate of five a month at some future point.

An adjusted loss of 60 cents per share compared with analysts’ average estimate of 20 cents per share, according to Refinitiv data.

Quarterly free cash flow of negative $507 million compared with negative $5 billion a year ago, while Boeing’s mountain of debt fell to $62.4 billion from $63.6 billion.

Advertisement

(Reporting by Sanjana Shivdas and Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Steve Orlofsky)

Continue Reading
Advertisement

Business

Alibaba overhauls e-commerce businesses, appoints new CFO

Published

on

December 6, 2021

(Reuters) -Alibaba Group Holding Ltd said on Monday it was reorganising its international and domestic e-commerce businesses and would appoint a new chief financial officer.

The changes come as Alibaba faces headwinds on multiple fronts, including increased competition, a slowing economy and a regulatory crackdown.

The e-commerce giant’s Hong Kong-listed shares slid 8% in early morning trade.

Advertisement

Alibaba said it would form two new units to house its main e-commerce businesses – international digital commerce and China digital commerce, in a bid to become more agile and accelerate growth.

The international digital commerce unit will house Alibaba’s overseas consumer-facing and wholesale businesses, and include AliExpress, Alibaba.com and Lazada. The unit will be headed by Jiang Fan, whose past roles include president of the Taobao and Tmall marketplaces.

Alibaba will house its domestic commerce businesses in the China digital commerce unit which be led by Trudy Dai, a founding member of Alibaba, it said.

The company’s deputy chief financial officer, Toby Xu, will succeed Maggie Wu as the company’s chief financial officer from April, it said, describing his appointment as part of the company’s leadership succession plan.

Xu joined Alibaba from PWC three years ago and was appointed deputy CFO in July 2019.

Advertisement

Wu, who helped lead three Alibaba-related company public listings as CFO, will continue to serve as an executive director on Alibaba’s board.

Last month the company slashed its forecast for annual revenue growth to its slowest pace since its 2014 stock market debut and saw sales at its banner event, online shopping festival Singles Day, grow at their slowest rate ever.

(Reporting by Akriti Sharma in Bengaluru and Brenda Goh in Shanghai; Editing by Edwina Gibbs)

Advertisement
Continue Reading

Business

China Evergrande shares hit 11-year low after firm says no guarantee it can meet repayments

Published

on

December 6, 2021

By Clare Jim

HONG KONG (Reuters) – Shares of China Evergrande Group tumbled 12% to an 11-year low on Monday after the firm said there was no guarantee it would have enough funds to meet debt repayments, prompting Chinese authorities to summon its chairman.

The shares fell as a 30-day grace period on a coupon payment of $82.5 million due on Nov. 6 comes to an end on Monday.

Advertisement

Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities. A collapse could send shockwaves through the country’s property sector and beyond.

In a filing late on Friday, Evergrande, the world’s most indebted developer, also said it had received a demand from creditors to pay about $260 million.

That prompted the government of Guangdong province, where the company is based, to summon Evergrande Chairman Hui Ka Yan, and it later said in a statement it would send a working group to the developer at Evergrande’s request to oversee risk management, strengthen internal controls and maintain normal operations.

In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.

Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, the People’s Bank of China said, adding that housing sales, land purchases and financing “have already returned to normal in China”.

Advertisement

Evergraned’s stock fell more than 12% to HK$1.98, its lowest since May 2010.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Christopher Cushing)

Continue Reading

Business

Oil gains more than $1/bbl after Saudi price hike

Published

on

December 6, 2021

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose by more than $1 a barrel on Monday after top exporter Saudi Arabia raised prices for its crude sold to Asia and the United States, and as indirect U.S.-Iran talks on reviving a nuclear deal appeared to hit an impasse.

Brent crude futures for February gained $1.69, or 2.4%, to $71.57 a barrel by 0033 GMT while U.S. West Texas Intermediate crude for January were at $67.92 a barrel, up $1.66, or 2.5%.

Advertisement

On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

The price hikes were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, to continue increasing supplies by 400,000 barrels per day in January.

Prices were also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect U.S.-Iranian talks on saving the 2015 Iran nuclear deal broke off last week. European officials voiced dismay on Friday at sweeping demands by Iran’s new, hardline government. The talks are expected to resume middle of this week.

Both benchmarks rebounded after falling last week for their sixth week in a row for the first time since November 2018 on concerns that the new coronavirus variant Omicron could impact global economic growth and fuel demand.

In another sign of the turmoil unleashed by the ever-changing pandemic, the head of International Monetary Fund said the global lender is likely to lower its global economic growth estimates because of the new variant.

Advertisement

Omicron has spread to about one-third of U.S. states as of Sunday.

(Reporting by Florence Tan; Editing by Stephen Coates)

Continue Reading
Advertisement

Trending