(March 17): Boeing Co pushed back a goal of generating positive margins at its key commercial unit by a year, as the cost of integrating newly acquired Spirit Aerosystems weighs on profitability.
The planemaker now expects to generate flat or positive margins at Boeing Commercial Aircraft only in 2027, chief financial officer Jay Malave told a conference on Tuesday. Boeing expects this year to be negative for margins at BCA, with the first-quarter margins to be -7% to -8.5%, Malave said.
Boeing found that Spirit, which it repurchased after spinning off the business two decades ago, had some performance issues that it discovered after taking the business back in-house, he said.
“You don’t get access to all the information until you actually close,” Malave said. “And so there was cost.” As a result, Boeing had to “reset” the margins at its commercial unit, with Malave calling it “a short-term headwind".
Boeing shares reversed gains after the executive’s comments and were at 2.9% at 10.24am in New York.
Malave also said that Boeing is fixing about 25 737 MAX aircraft after discovering some issues with wiring, which it flagged last week. As a result, about 10 units will slip into the second quarter in terms of deliveries, he said.
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