Key takeaways
- Boeing misses profit estimates despite higher quarterly revenue
- Commercial airplane division loses $697 million amid production challenges
- Record $745 billion backlog highlights demand despite losses
Boeing reported $24.2 billion in third-quarter revenue on October 27, but its earnings fell short of Wall Street expectations as higher production costs pushed the commercial airplane division into a $697 million operating loss.
The aerospace manufacturer posted an adjusted loss of $0.34 per share, compared with the $0.21 loss expected by analysts surveyed by LSEG. Revenue rose 4% from a year earlier and exceeded estimates, while the company narrowed its overall net loss to $116 million.
According to Boeing's third-quarter results, the company also generated positive free cash flow and expanded its order backlog to a record $745 billion, underscoring the uneven progress of its financial recovery.
Boeing's Commercial Airplane Business Remains Unprofitable
Boeing Commercial Airplanes generated $10.72 billion in quarterly revenue, down approximately 3% year over year, while its operating margin fell to negative 6.5%.
The $697 million operating loss reflected higher expected production and supply-chain costs, along with a less profitable mix of aircraft deliveries.
Boeing delivered 161 commercial aircraft during the quarter, compared with 171 in the preceding three months. Increasing production of the 737 MAX from 42 to 47 aircraft monthly has proved challenging, partly because of wing manufacturing constraints.
The difficulties come despite recent regulatory progress. The Federal Aviation Administration certified the 737 MAX 7 and MAX 10, removing important obstacles for two long-delayed aircraft variants.
Boeing's production problems also contrast with strong demand from airlines, including carriers considering new aircraft for international expansion.
Record $745 Billion Backlog Masks Uneven Recovery
Boeing ended September with a record $745 billion order backlog, up from $715 billion at the end of June and including more than 6,300 commercial airplanes.
However, the backlog represents outstanding contracted work rather than immediate revenue. Boeing must manufacture and deliver aircraft while controlling costs to convert that demand into sustainable profits.
The distinction resembles the company's earlier $131 billion F-15 contract, whose maximum contract ceiling does not guarantee equivalent revenue.
Boeing's defense business provided a brighter spot, generating approximately $7.94 billion in revenue, up 15%, and nearly $500 million in operating profit.
The improvement follows the company's $20 billion Navy fighter development award, alongside additional military contracts.
Its defense portfolio has also benefited from Apache helicopter support work, although long-term awards must still be executed profitably.
Can Boeing Turn Strong Demand Into Cash?
Boeing generated approximately $464 million in third-quarter free cash flow, marking another positive quarter despite continuing aircraft production problems.
Nevertheless, free cash flow remained negative by approximately $359 million across the first nine months, leaving the company dependent on a stronger final quarter to deliver positive full-year cash generation.
The turnaround also unfolds against a challenging airline market. American Airlines recently reported a substantial increase in fuel expenses, illustrating how rising operating costs can strain customers even when travel demand remains resilient.
