Boeing made a loss of $234 million in the second quarter of 2016, which it says is due to reclassification of research & development (R&D) for the 787, and charges for the 747 and KC-46 Tanker programmes.
Boeing warned on 21 July that the changes to the 787, 747 and KC-46 would impact the results. At the time Boeing said that not investing the funds for the refurbishment and sale of the two unsold flight test 787s would result in a non-cash after-tax charge of $847 million. Slowing the production rate of the 747-8 due to a weak air cargo market resulted in an $814 million after-tax charge and there was an after-tax charge of $393 million on the KC-46 programme.
Boeing chairman, president and chief executive officer, Dennis Muilenburg says: “The underlying operating performance of the company remains solid with our commercial and defense teams again delivering strong revenues and operating cash flow. Actions taken during the quarter that impacted our earnings were the right, proactive steps to reduce risk and strengthen our position for the future.”
Total revenue increased by one per cent during the quarter to $24.7 billion and the same amount for the first half of 2016 to $47.4 billion.
In the Commercial Airplanes sector, revenue was up three per cent during the second quarter to $17.4 billion and down one per cent in the first half to $31.8 billion. The sector made a loss of $973 million during the quarter and earnings were down 98 per cent to $60 million in the first half due to 787 R&D reclassification, and pre-tax charges in the 747 and KC-46 programmes.
During the quarter, the 787 programme reached 12 deliveries a month, and Boeing opened the 777X Composite Wing Center in Everett. The first two production 737 MAXs were rolled out and Boeing says the development programme is “progressing smoothly and entry is being accelerated”.