Boeing posts $4 billion loss; Is the worst behind it?

Boeing reported its fourth-quarter results, confirming a challenging year that saw the company post a significant net loss while grappling with labor stoppages, supply chain disruptions, and program inefficiencies. As a reminder, the company preannounced earnings last week, which will take out some of the surprise from today's numbers.

The company recorded a net loss of $3.86 billion, or $5.46 per share, missing analysts’ expectations of a $3.00 per-share loss. Revenue came in at $15.24 billion, well below the consensus estimate of $16.21 billion and reflecting a 31% year-over-year decline. Adjusted free cash flow was negative $4.1 billion, slightly better than the projected $4.17 billion loss. Boeing’s Defense, Space & Security division, plagued by $1.7 billion in program charges related to contracts such as the KC-46A tanker and T-7A trainer, posted a steep $2.27 billion operating loss, which contributed significantly to the company’s overall poor performance.

CEO Kelly Ortberg, who took the reins in 2024, is spearheading a turnaround effort aimed at stabilizing production, improving operational efficiency, and restoring trust across stakeholders. Ortberg highlighted that Boeing has resumed production of the 737 Max and restarted test flights for the 777X. However, he acknowledged the road ahead will be challenging. Boeing’s plan includes focusing investments on its core businesses while exploring divestiture opportunities in non-essential areas. Ortberg also pointed to signs of progress, such as stabilizing supply chains and mending relationships with key customers, though these steps will take time to reflect meaningfully in the financials.

Operational challenges weighed heavily on the results. A nearly two-month machinist strike significantly delayed production, forcing customers like American Airlines and Ryanair to adjust their schedules. American Airlines, for instance, suspended service on several routes and cut frequencies due to late deliveries of 787 Dreamliners. Boeing’s Commercial Airplanes division generated $4.76 billion in revenue for the quarter but was hindered by production delays and labor disruptions. The Defense division struggled with program inefficiencies and cost overruns, reflecting ongoing challenges in delivering on high-profile projects such as the Air Force One planes. By contrast, the Global Services division, a key profit driver, posted $5.12 billion in revenue and $998 million in operating earnings, showcasing its resilience amid broader struggles.

Boeing also faces geopolitical headwinds. The company is preparing for potential tariffs under the Trump administration, which could disrupt its cross-border supply chains and raise production costs. CFO Brian Jacobson emphasized that the company has been proactively expediting deliveries of Canadian- and Mexican-made aircraft to mitigate potential tariff impacts, though long-term adjustments may be needed. CEO Ortberg described his discussions with President Trump as “productive” but stressed the need for clarity on tariff specifics before finalizing contingency plans.

Looking ahead, Boeing aims to stabilize its operations and build momentum in its commercial and defense segments. While it incurred $3 billion in charges during the fourth quarter, the company sees opportunities to streamline its portfolio and invest in areas critical to its future. Boeing is targeting significant improvements in its production cadence and delivery timelines, particularly for the 737 Max and 777X, while focusing on restoring profitability in its defense business. Additionally, its backlog of $521.34 billion underscores robust demand for its products, providing a foundation for long-term recovery.

Despite its steep losses, Boeing maintains that it is taking the necessary steps to turn the corner. While the path to recovery may be long, investors and stakeholders will closely watch the company’s ability to execute its turnaround strategy, deliver on key programs, and navigate potential geopolitical risks. The upcoming months will be critical in determining whether Ortberg’s leadership can restore Boeing’s reputation as a leading aerospace manufacturer and return the company to sustainable profitability.

Shares of BA are holding steady as much of the negative news has been priced into shares. The stock faces resistance at the $182 level. Shares have found support at the 200-sma ($168). The stock may chop around in this area until investors get greater clarity on both the turnaround and tariff plans.