By Abhijith Ganapavaram and Rajesh Kumar Singh

(Reuters) -Boeing Co on Wednesday surprised Wall Street by generating cash from operations in the second quarter and stuck to its cash flow goal for the year in a sign the planemaker was gradually overcoming costly production snarls.

Shares of the U.S. planemaker rose 2.7% as 737 MAX jet deliveries more than doubled and Chief Executive Dave Calhoun said Boeing was in the “final stages” of preparing to restart 787 Dreamliner deliveries.

While the company posted a wider-than-expected adjusted loss due to charges, operating cash flow came in at $81 million in the quarter. Analysts had expected a cash burn of $480.33 million, as per Refinitiv data.

“While Q2 results were still far from perfect, this is Boeing’s cleanest quarter in a while,” Melius Research analyst Robert Spingarn said.

Boeing’s cash flow has become a focal point for investors, as the planemaker borrowed heavily to wade through successive crises caused by the 737 MAX grounding and the pandemic. The company’s debt stood at $57.2 billion as of June 30.

Some analysts were skeptical about Boeing achieving its cash flow goals this year, as the company works through industry-wide supply-chain disruptions and labor shortages that have hobbled production.

“Even as we navigate a difficult environment, we are making progress across key programs and are beginning to hit significant milestones,” Chief Executive Dave Calhoun said in a letter to employees.

A resumption in deliveries of the wide-body Dreamliner would mark a significant milestone for Boeing as it looks to turn around its fortunes amid a resurgence in air travel.

Deliveries of the jet have been halted for more than a year by inspections and repairs to fix manufacturing flaws in an industrial headache costing the company about $5.5 billion.

DEFENSE AND SPACE PAIN

The planemaker took a fresh charge of $240 million related to its commercial crew and unmanned aircraft refueling programs at its defense, space & security unit.

The business, which was also weighed down by weak sales, has been a pain point for Boeing in recent years, delaying the company’s recovery.

“We continue to work through hurdles on our fixed-price development programs amidst a challenging macro-economic environment,” Calhoun added.

Boeing posted a core loss of 37 cents per share in the quarter through June, wider than analysts’ estimates of a loss of 14 cents per share.

Revenue fell about 2% to $16.68 billion, missing expectations of $17.57 billion, as per Refinitiv data.

(Reporting by Abhijith Ganapavaram in Bengaluru and Rajesh Kumar Singh in Chicago; Editing by Saumyadeb Chakrabarty)

The Boeing logo is seen on the side of a Boeing 737 MAX at the Farnborough International Airshow in Farnborough, Britain,.

Reuters