Boeing Co. (BA) - Get Report shares extended gain Tuesday, taking its one-week advance past 4% after chairman Dave Calhoun defended CEO Dennis Muilenburg in a CNBC interview and insisted production rates for the troubled 737 MAX won't be cut despite potential delays to its planned return to service.
Speaking with CNBC's Phil Lebeau, Calhoun said Muilenberg had "done everything right" and "has our confidence" despite criticism from investors and lawmakers for his handling of the crisis that followed two fatal crashes of the 737 MAX, which investigators has linked to failures of the plane's MCAS flight software system. Calhoun also said he doesn't see any changes to production rates for the MAX, which Boeing indicated last month would rise from 42 planes per months to 57 planes per month by the end of 2020.
"From the vantage point of our board, Dennis has done everything right," Calhoun told CNBC. "Remember, Dennis didn't create this problem. From the beginning, he knew that MCAS could and should have been done better and he has led a program to rewrite MCAS to alleviate all of those conditions that ultimately beset two unfortunate crews and the families and victims."
Boeing shares were marked 1.6% higher at the start of trading Tuesday to change hands at $356.95 each, a move that extends the stock's year-to-date gain to around 11%.
Boeing shares have been gaining steadily since the world's biggest planemaker posted weaker-than-expected third quarter earnings Wednesday, but said it still expects the troubled 737 MAX aircraft to receive approval from at least one major regulator before the end of the year.
Boeing said it would increases costs related to the grounded 737 MAX by around $900 million, taking the total to around $3.6 billion, but not only expects a return to service in the fourth quarter, but also sees production rising from 42 planes per months to 57 planes per month by the end of 2020.
"Our top priority remains the safe return to service of the 737 MAX, and we're making steady progress," said Muilenburg said on October 23. "We've also taken action to further sharpen our company's focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality and integrity always at the forefront."
Boeing said overall aircraft orders fell by more than two-thirds, to just 62 units for the third quarter, and trimmed its forecast for 787 Dreamliner production to 12 planes from 14, beginning in late 2020, thanks in part to ongoing U.S.-China trade tensions.
The world's biggest planemaker still has an order backlog of $470 billion, however, thanks to net orders of $16 billion in the third quarter. However, the continued difficulties in sorting out safety issues with the grounded 737 tipped free cash flows into negative territory, with Boeing pegging the figure at -2.42 billion, down from +$4.56 billion for the same period last year.