Boeing lost $2.4 billion in three months
Boeing lost $2.4 billion over the past three months, the company revealed Wednesday. It’s just the latest sign of trouble for the aerospace giant as the COVID-19 pandemic continues taking deep cuts out of US business.
In a note to employees, Boeing CEO Dave Calhoun said that the “prolonged impact” of the virus will require the company to “further assess the size of our workforce,” signaling Boeing will cut more jobs than the 16,000 — about 10% of its workforce — it previously announced.
Wall Street wasn’t shocked. Investors already knew Boeing’s deliveries 10 jets last month as it began ramping up production after its factory was shuttered by the pandemic, and analysts’ expectations for Boeing’s posted revenue and net loss were spot-on.
Boeing stock was up slightly during pre-market trading.
The company also revealed earlier in July that it was able to deliver only 20 commercial airplanes last quarter — the lowest number of commercial airplanes delivered in a quarter by Boeing since 1977.
And 60 Boeing aircraft orders were canceled in last month, adding to the 150 orders canceled in March, 108 in April, and 18 more in May.
Boeing’s customer base, airlines, have been among the hardest hit by the pandemic. The nosedive in demand for air travel has forced carriers to move thousands of jets into storage, leaving the airlines to bleed tens of millions of dollars every day with no end in sight.
That’s left little appetite for buying new jets from aircraft manufacturers like Boeing.
“The reality is the pandemic’s impact on the aviation sector continues to be severe,” Calhoun, Boeing’s CEO, said in his letter to employees Wednesday. “While there have been some encouraging signs, we estimate it will take around three years to return to 2019 passenger levels.”
Boeing still has more than 4,500 orders in its backlog — enough to keep its factories working for years to come. But the June results mean Boeing has 843 canceled or uncertain orders in 2020, compared to only 59 new orders.
The company counted only one new sale last month: a 767 freighter destined for FedEx. Thanks to a surge in e-commerce orders and demand for hauling medical equipment across the globe, cargo carriers have proved to be the sole bright spot in the airline industry.
To help ease the financial pressure, Calhoun said the company has temporarily stopped paying investor dividends, halted its stock buyback program, cut spending and costs, and taken on $25 billion in debt.
“The diversity of our portfolio and our government services, defense and space programs provide some stability in the near term as we take these tough but necessary steps,” Calhoun said of Boeing’s planned job cuts.
Boeing is able to reduce staff because it chose not to accept grants and loans via the CARES Act, though the company had previously said it needed a $60 billion bailout to survive the pandemic. The government barred companies that accepted CARES Act funds from cutting jobs at least until October.
Major US airlines, however, did accept CARES Act funding. But those funds are quickly drying up, and carriers are now warning tens of thousands of airline workers may lose their jobs when the layoff ban is lifted in October.
Though, not all of Boeing’s aircraft sales issues were pandemic related: The company is still in the early stages of resuming production of its beleaguered 737 Max jets. The 737s, which were once Boeing’s best-selling aircraft, remain grounded after faulty software on the jets was linked to two fatal crashes.
Boeing said Wednesday it has “made steady progress toward he safe return to service of the 737, including completion of FAA certification flight tests” last quarter.
CNN Business’ Chris Isidore and CNN’s Gregory Wallace contributed
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