Boeing (BA.US) Beats Second-Quarter Expectations as Cash Flow Worsens to $2 Billion

According to our sources, Boeing (BA.US) almost stopped bleeding cash in the second quarter, indicating that CEO David Calhoun's transformation plan, launched a year ago, is starting to show results. With increasing aircraft deliveries, the company's financial situation is gradually improving. The report shows that Boeing's second-quarter revenue reached $227.5 billion, with a 34.6% year-over-year increase, exceeding analysts' expectations by around $10 billion; adjusted earnings per share were $1.24, beating expectations of $1.40.

Boeing only spent $2 billion in cash over the three-month period, far lower than analyst expectations of $18 billion. The company's quarterly loss was also smaller than expected, with revenue exceeding estimates.

Boeing is recovering from its most difficult period in recent years, including a near-disastrous accident at the beginning of 2024 and a crippling strike at year-end. These crises squeezed the company's finances, prompting Boeing to sell nearly $240 billion worth of stock. Aerospace veteran Calhoun was re-hired as CEO last year to lead the company's revival.

In a letter to employees, Calhoun said, "By mid-2025, I'm feeling satisfied with our progress... We're starting to see performance improvements across all aspects of our business."

Last year, Boeing spent over $140 billion in cash. Subsequently, aircraft orders became an important bargaining chip for the US government in trade negotiations, with Trump using multiple trade deals to tie up Boeing orders. This, in turn, supported Boeing's business.

This American manufacturer has already exceeded European rival Airbus' order volume this year. Boeing's defense business recorded a profit for the second consecutive quarter, and as production schedules stabilize, commercial aircraft deliveries are rising. In the first half of the year, Boeing delivered 280 aircraft, setting a record since 2018.

As of Monday's close, the stock has gained 34% year-to-date, performing best among the 30 Dow Jones industrial average components, reversing losses suffered last year when the stock plunged 32%, one of the worst annual performances on record.

The report includes $4.45 billion in settlements related to two fatal crashes involving the 737 Max, but a Texas court has yet to approve Boeing's agreement with the Justice Department.

However, Calhoun's transformation is still in its early stages, taking into account the company's debt burden and volatile market conditions, recovery remains uncertain. The CEO confirmed that, due to ongoing redesign of the engine de-icing system, certification for the last two 737 Max models (-7 and -10) may be delayed until 2026.

Since May, Boeing has maintained a production rate of 38 aircraft per month, but needs FAA approval to increase it to 42. Calhoun noted that the monthly production rate for the 787 Dreamliner has increased from 5 to 7.

Boeing's commercial aircraft business recorded a narrower loss year-over-year, while its defense department achieved an operating profit of $1.1 billion and did not incur any accounting expenses. Calhoun said that those fixed-price research projects that caused the most severe cost overruns are seeing performance improvements.

However, the department's recovery faces new threats – a strike by over 90% of workers at the St. Louis factory who rejected the company's proposal and voted to go on strike. The two sides are currently in a cooling-off period but have yet to restart contract negotiations.

Boeing's global services division remains the company's most profitable segment, with an operating margin of 19.9% and revenue of $10.5 billion.