Boeing stock rallies on plane progress despite $11.8-billion annual loss

By Abhijith Ganapavaram, Allison Lampert and Dan Catchpole

(Reuters) -Boeing said on Tuesday it was making progress on increasing plane production, and its shares jumped nearly 8%, despite the company recording its biggest annual loss in four years.

The $11.8-billion loss, due to problems at its major units, along with fallout from a crippling strike that shuttered production of most of its jets, demonstrates the challenges facing CEO Kelly Ortberg in turning around the U.S. planemaker.

Boeing has ceded ground to rival Airbus in the delivery race and entered the crosshairs of regulators and customers following a series of missteps.

CFO Brian West told analysts the planemaker had delivered 33 of its strongest-selling 737 jets so far in January. West added the company expects to be in position later this year to exceed a cap of 38 per month imposed by U.S. regulators, but would need approval of the Federal Aviation Administration.

"The second half is likely going to benefit from achieving higher production rates, which include the 38 per month target, and possibly higher, based on approval from the FAA," West said.

Ortberg told Reuters earlier he is "not too worried" about U.S. President Donald Trump's threats to impose tariffs on trade partners, which could affect Boeing’s far-flung supply chain. He added that Boeing does not plan to start work on a new airplane program in the near future.

Boeing shares surged as much as 7.6%, touching a nearly six-month high, before paring gains.

Ortberg, who took the planemaker's helm in August, said the company is restoring production stability, after a harrowing mid-air accident a year ago raised concerns about the safety of its jets.

Lower 2024 output has contributed to pressure on Boeing's finances, driving its credit rating down to just above junk level as it accumulated $87.5 billion in inventory from suppliers.

West said the company would reduce inventory as output becomes more predictable, improving cash flow.

“It’s been an investment in stability and we’re committed to make that investment so we can get the factories in the right spot,” West said.

Ratings agency Moody's on Tuesday concluded a review of Boeing's credit rating, a process that had raised the possibility of a downgrade. Moody's stuck to its previous "Baa3" rating, a notch above junk status.

Boeing, which has returned to a production rate of five per month for its widebody 787 jets, will move to a rate of seven a month, hopefully in the next quarter or so, Ortberg said. The company is working through supply chain difficulties of parts such as seats.

Ortberg said in the interview he is considering non-core segments to sell, likely from Boeing's defense, space and services division.

“This is not going to be a major restructuring of the Boeing company,” Ortberg told analysts.

West reiterated that the company will burn cash during the first half of the year, but cash flow will turn positive in the back half of 2025.

Boeing did not report guidance for this year, but has previously told investors it planned to generate $10 billion in annual free cash flow by 2025 or 2026, a goal widely expected to be delayed.

For the quarter, the company reported a cash burn of $4.1 billion, slightly lower than analysts' expectation of a $4.26-billion cash burn, according to data compiled by LSEG.

Boeing reported a loss of $3.86 billion in the fourth quarter due to what Ortberg called "disappointing" charges in several fixed-price defense programs. Ortberg, however, added in a letter to employees on Tuesday that Boeing was "now more proactive and clear-eyed on the risks" to the programs.

Ortberg reiterated the company's four-part plan to turn the business around, including a multi-year effort to fix Boeing's culture. 

After banking record-high profits in the 2010s, Boeing has bled more than $30 billion since 2019 after two fatal crashes of its best-selling 737 MAX jet triggered production quality and safety concerns.

The pandemic further squeezed the company, while the mid-air panel blowout on a nearly new 737 MAX last January dragged Boeing into another crisis.

Ortberg told analysts that the company has work to do on its defense, space and security business, which lost $5.41 billion in 2024, hit by overruns on several fixed-price programs.

Ortberg said Boeing is working with Tesla CEO Elon Musk, a close Trump ally, to see if the company can speed up the delivery schedule for the delayed U.S. presidential aircraft known as Air Force One.

Boeing's commercial planes division, now focused on getting three of its models certified, has a good handle on fixing a thrust link issue uncovered on its 777X widebody, which resumed flight tests this month, he added.

Revenue for the quarter through December fell 31% to $15.24 billion, missing analysts' expectation of $16.21 billion, according to LSEG data.

Quarterly adjusted loss per share was $5.90, compared with expectations of a $3 loss per share.

Cash burn was $14.3 billion in 2024, compared with a cash flow of $4.43 billion in 2023.

(Reporting By Abhijith Ganapavaram in Bengaluru, Allison Lampert in Montreal and Dan Catchpole in Seattle; additional reporting by David Shepardson in Washington; Editing by Anil D'Silva and Rod Nickel)