Boeing returns to positive free cash flow despite $4.9B charge due to new 777X delays

Controversial Pentagon customer Boeing reported stronger jetliner deliveries for the third quarter, pushing the company back into positive free cash flow for the first time in nearly two years, according to the company’s earnings release.

The company recorded $238 million in free cash flow for the period ending September 30, even as it logged a $4.9 billion charge tied to further delays on the 777X wide-body aircraft program.

The 777X first flew almost six years ago and is still waiting for regulatory approval. Boeing now expects first delivery in 2027, leading to the non-cash charge tied to development and certification delays.

The company also said that it is on pace to deliver the highest number of commercial aircraft since 2018, when two 737 Max crashes, pandemic disruptions, and supply chain issues halted production momentum.

Boeing CEO Kelly Ortberg said in her staff note after the beat, “We’re seeing positive signs across our business, and I’m proud of how we are coming together to turn our company around.”

The company reported a $4.78 billion net loss for the quarter, or $7.14 per share, which compares to a $5.76 billion loss one year ago.

On an adjusted basis, Boeing saw a $7.47 per share loss, with total revenue surging 30% year over year to $23.27 billion, surpassing expectations.

Commercial aircraft deliveries increase

In the first nine months of the year, Boeing delivered 440 aircraft, up from 291 during the same period last year.

Plane buyers typically make final payments upon delivery, so delivery volume is critical to reversing nearly $17 billion in cash outflows recorded from early 2024 through June, said Boeing.

The company’s commercial airplane division generated $11.09 billion in revenue in the quarter, up 49% from the previous year, though the segment continued to report negative operating margins.

Meanwhile, the defense unit brought in $6.9 billion, a 25% increase, with a 1.7% operating margin. Boeing’s global services business recorded $5.4 billion, a 10% increase from a year earlier.

Earlier this month, the Federal Aviation Administration (FAA) lifted a production cap for Boeing’s 737 Max to 42 a month from 38.

The regulator has also begun allowing Boeing to perform final internal safety signoffs on some aircraft, indicating changed oversight conditions.

Defense reliance continues as labor tensions remain

The company is also supported by long-term U.S. defense spending under president Donald Trump.

Private companies have received $2.4 trillion in Pentagon contracts, equal to 54% of the Defense Department’s discretionary spending during that period.

Five defense companies accounted for $771 billion of that total: Boeing ($115B), Lockheed Martin ($313B), RTX ($145B), General Dynamics ($116B), and Northrop Grumman ($81B).

These federal contracts remain a stabilizing factor as Boeing continues dealing with certification delays in commercial programs such as the Max 7, Max 10, and 777X.

“Pencils are down from a design perspective” on an anti-icing system for the two Max variants, the largest and smallest of the family, Ortberg told CNBC’s “Squawk on the Street” on Wednesday. “We know what hardware and software changes are needed to the airplane.”

Labor issues also remain unresolved too. Around 3,200 Boeing defense workers involved in building F-15 fighter jets and missile systems have been on strike since the summer, with no agreement reached so far.

Last year, a machinists’ strike affected most commercial airplane factories and slowed output significantly, according to the earnings report.

Airline customers have recently said that Boeing has become more accurate with delivery schedules after years of complaints tied to late handovers and sudden production adjustments.

Cryptopolitan had reported that President Donald Trump wants the government to take positions in major defense manufacturers, including Palantir, Boeing, and Lockheed Martin.

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