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Boeing reports $3.3 billion third-quarter loss

A Boeing Max 737 is seen on display at the Farnborough International Air Show in Farnborough, England, on July 18, 2018. File Photo by Cityswift/Flickr
A Boeing Max 737 is seen on display at the Farnborough International Air Show in Farnborough, England, on July 18, 2018. File Photo by Cityswift/Flickr

Oct. 26 (UPI) -- Aircraft giant Boeing reported a massive $3.3 billion loss Wednesday, stating the losses are driven by higher-than-expected manufacturing costs.

Boeing President and CEO Dave Calhoun shared a message to employees acclaiming "important strides in our turnaround effort." He said the company is still experiencing challenges relating to the economy and a still slow supply chain.

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Revenue for the quarter was $15.96 billion, up 4% from a year ago. The company's quarterly loss of $3.3 billion, or $5.49 per share, compares with a loss of $132 million, or 19 cents a share, for the same time last year.

Boeing reported $2.9 billion in free cash flow in the quarter, compared with $507 million in outflows a year ago.

"While our cash generation was strong, our revenue and earnings were significantly impacted by losses on fixed-price development programs in our defense business, driven by higher estimated manufacturing and supply chain costs, as well as technical challenges," Calhoun said in a statement.

"We're squarely focused on maturing these programs, mitigating risks and delivering for our customers and their important missions."

Shortly after the report of the $3.3 billion loss, Alaska Air requested to purchase 52 Boeing 737 MAX aircrafts, the largest order in the airline's history.

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"This investment secures aircraft to optimize our growth through the next decade, which we know will be a formidable competitive advantage," said Alaska Airlines CEO Ben Minicucci. "We're proud of the strong financial foundation that uniquely positions Alaska to make this commitment to our future, and of the fantastic partnership we share with our hometown aircraft manufacturer at Boeing."

Alaska Air is expecting the delivery of another 43 MAX aircraft by the end of next year and is already using a fleet of 35 Boeing 737-9 planes. The company states it could be using up to 250 737 MAX series aircraft by 2030.

While Boeing continues to grapple with supply chain shortages, it is also experiencing constraints in its business with China. Calhoun said he has not been notified that China will be accepting deliveries from Boeing anytime soon. Due to the hold up, Boeing is putting 138 MAX aircraft that were produced for China back on the market.

Boeing's Defense and Space division reported $5.3 billion in revenue and losses of $2.8 billion. The company delivered four test aircraft to the U.S. Air Force in the third quarter and received additional orders, along with orders for the Israeli Air Force.

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