Boeing's cash flow deteriorates, stock price plunges by 7.2%, latest revelation: nearly 300 aircraft at risk of fuel tank "explosion"

Due to the certification process for Boeing aircraft by major customers, Boeing's aircraft delivery volume has stalled, leading to a deterioration in the company's cash flow and another heavy blow to Boeing's stock price. In addition, Boeing has been exposed to new safety issues, with a risk of fuel tank "explosion".

Overnight on Thursday, Boeing led the Dow Jones Industrial Average lower, with its stock price plunging more than 7.2% at one point, marking the largest single-day decline since January 25.

Analysis indicates that the main reasons for this are unfavorable remarks made by Boeing's senior management at industry conferences, as well as news of delayed aircraft deliveries to China, causing Boeing's stock price to plummet in response.

According to reference news, an insider said that due to the scrutiny of cockpit voice recorder batteries by Chinese regulatory authorities, Boeing's aircraft deliveries to China have been delayed in recent weeks. Boeing stated in a release that it is discussing delivery times with Chinese customers, and the Civil Aviation Administration of China is currently reviewing the batteries in the 25-hour cockpit voice recorders.

In a document submitted by Boeing at the end of 2023, it stated that it has an inventory of approximately 140 737 MAX 8 aircraft, with 85 aircraft intended for Chinese customers. As of the end of April, Boeing has delivered 22 aircraft to China this year, but in recent weeks, due to previously unreported inspections, Boeing has not delivered any new aircraft to Chinese customers.

Meanwhile, Boeing's Chief Financial Officer Brian West confirmed this news at an industry conference on Thursday morning, stating that Boeing's second-quarter delivery volume will not increase and will remain essentially flat compared to the first quarter. In addition, Boeing announced that it expects to face a net cash outflow this year.

This is bad news for Boeing, as the implication is that major customers are no longer interested in Boeing aircraft, leading to unsold aircraft and increased spending rather than earnings for the company (net cash outflow) this year. Previously, media analysts estimated Boeing's free cash flow for this year at $1.25 billion. However, the market is now beginning to lower its expectations for Boeing's cash flow.

For example, analyst Sheila Kahyaoglu from Jefferies downgraded Boeing's cash flow forecast from positive $1.2 billion (expected to earn $1.2 billion) to a cash outflow of $2.2 billion.

Latest News: Another issue with Boeing aircraft, nearly 300 aircraft at risk of fuel tank "explosion"

Not only did Boeing fall more than 7.2% at one point during today's trading session, but looking at a longer time frame, Boeing has already accumulated a 33% decline year-to-date, ranking second worst among the 30 industrial companies in the Dow Jones, only behind Intel's 40% decline. Boeing's long-standing safety issues and the crisis of public trust have led to a significant decline in Boeing's stock price Moreover, according to the latest news, Boeing aircraft "encountered trouble again." On May 23rd, it was reported by the media that another batch of Boeing 777 jet aircraft has "catastrophic" defects. Specifically, the electrical insulation near the fuel tank of Boeing 777 aircraft is insufficient. If this issue is not resolved, it may lead to the occurrence of ignition sources inside the fuel tank, thereby causing a fire or explosion. Currently, these 777 aircraft are operating globally, with multiple airlines such as United Airlines and American Airlines using them. Therefore, there is a "explosion" risk in the fuel tanks of United Airlines and American Airlines' 292 Boeing 777 aircraft.

In March of this year, the Federal Aviation Administration (FAA) of the United States has already noticed this safety hazard and requested Boeing to provide a solution by May 9th. It is pointed out by the media that it is currently unclear whether Boeing has taken corresponding measures.

It is reported that several accidents have occurred involving 777 aircraft. Earlier this week, a 777 aircraft on a flight from London to Singapore suddenly descended by 6000 feet. Last month, a former Boeing employee named Sam Salehpour reported to US congressmen that Boeing 787 and 777 aircraft have serious safety issues. He mentioned that these aircraft may have early fatigue failure issues, meaning that certain components of these aircraft are damaged earlier than expected, and Boeing may still be producing defective aircraft. Salehpour is still alive more than a month after making the report.

As time goes by, the problems faced by Boeing continue to increase, from the sudden descent of the 777 aircraft earlier this week, to the fireball explosion of the 747 aircraft engine last week, and to a series of recent accidents, including a 767 cargo plane making an emergency landing in Turkey, a Boeing 737 crashing after a failed takeoff at an African airport, and a United Airlines Boeing 737 returning to a Japanese airport due to abnormal wing flaps. Boeing is overwhelmed by the crisis, its stock price has been severely hit in the past 5 years, and Boeing's CEO Dave Calhoun resigned at the end of this year