Boeing reports first drop in revenue and Moody's cuts credit ratings

ARLINGTON, Virginia: Despite beating analyst expectations that were lowered following a mid-air blowout of a door plug on an Alaska Airlines flight in January, which slowed production of its best-selling planes, this week, Boeing reported its first quarterly revenue drop in seven quarters.

In an interview with CNBC, Boeing CEO Dave Calhoun, who is leaving his position by the end of the year, said a deal to acquire its key supplier, Spirit AeroSystems, is now more than likely during the second quarter.

Issues that must be worked out include price and talks with Spirit customer Airbus, Boeing's major rival, Calhoun added, stressing that Boeing can move forward without full clarity on the Airbus side.

"We are not being held hostage," he further added.

The company's quarterly revenue totaled US$16.57 billion, compared with $17.92 billion a year earlier but surpassing forecasts of $16.23 billion.

The plane maker's second quarter cash burn would be "sizeable," but free cash usage will improve from the $3.93 billion cash burn in the first quarter, less than the $4.49 billion analysts expected following the 5th January accident involving a nearly new 737 MAX 9 jet, Boeing CFO Brian West said.

In a note, Vertical Research Partners analyst Robert Stallard said, "Well, it could have been worse. While the loss and the cash outflow are not as bad as feared, the company is still clearly facing some serious challenges."

Boeing's credit rating was also cut to the bottom of investment grade by ratings agency Moody's.

Since the Alaska Airlines incident, the US Federal Aviation Administration (FAA) imposed a cap on production of single-aisle 737 MAX jets and gave Boeing 90 days from February 28 to adopt a comprehensive plan to improve quality control.