Boeing said on Wednesday it plans to cut production from planes and warned of further reductions in its workforce as the impact of the coronavirus pandemic affects demand for air travel.
The pandemic has caused financial losses for Boeing airline customers and has affected demand for new aircraft. Boeing was in crisis before the coronavirus spread worldwide due to the consequences of two fatal accidents of its 737 Max that claimed 346 lives.
Weaker demand prompted Boeing earlier this year to announce a planned cut in the workforce of 10% of its 160,000-person staff, through purchase packages and involuntary cuts.
“Unfortunately, the prolonged impact of COVID-19 causing further reductions in our production rates and less demand for commercial services means that we will have to further evaluate the size of our workforce,” CEO Dave Calhoun said in a staff note. after the company released a quarterly loss of $ 2.4 billion. “This is tough news, and I know it adds uncertainty during an already challenging time. We will try to limit the impact on our people as much as possible in the future.”
This is what Wall Street expected, based on average analyst estimates compiled by Refinitiv:
- Losses per share: $ 4.79 per share, adjusted, vs. $ 2.54 expected
- Revenue: $ 11.8 billion vs. $ 13.16 billion expected
The company’s second-quarter results were worse than analysts had expected. Revenue fell 25% to $ 11.81 billion from $ 15.75 billion a year earlier and below analyst forecasts for sales of $ 13.16 billion. The commercial aircraft unit suffered the most with a 65% drop in revenue the previous year to $ 1.6 billion as deliveries of new aircraft fell.
Boeing’s defense unit proved to be more resilient than its commercial business, contributing $ 6.6 billion, roughly unchanged during the year.
For the quarter ended June 30, Boeing’s net loss decreased to $ 2.40 billion, or $ 4.20 per share, from $ 2.94 billion, or $ 5.21 per share, a year earlier, when it recorded a charge of nearly $ 5 billion in his embattled 737 Max program.
On an adjusted basis, Boeing lost $ 4.79 per share, compared to a loss of $ 2.54 per share estimated by Wall Street.
Boeing shares rose 1.2% in premarket trading. But the stock is trading at about half its value from a year ago. Regulators are not expected to clear the 737 Max to fly again before the crash.
The long grounding of the 737 Max coupled with financial pain in carriers has caused cancellations and a shortage of new orders for new Boeing aircraft this year, which means less cash for manufacturers and suppliers.
The impact has already reached General Electric and Spirit Aerosystems. Spirit, which makes the fuselages for the Max, asked lenders to loosen the terms of some of its debts, sharing a forecast for far fewer deliveries of the 737 than originally expected, according to a forecast seen by CNBC.
Boeing confirmed plans to reduce its planned production acceleration. He said he would gradually increase the manufacturing of his 737 Max to 31 per month in early 2022, later than expected. It will again cut production of its 787 aircraft to six a month next year.
Boeing also said it would finish production of the 747, an aircraft that it has produced for more than five decades and is credited with driving a worldwide travel boom in 2022.
Boeing has more than 470 aircraft on the ground that have not been delivered to customers, most of them 737 Max aircraft, according to consulting firm Ascend by Cirium.
Airbus, Boeing’s main rival, is also affected by the crisis and plans to report the results on Thursday.
Calhoun said in April that demand for air travel will likely take two to three years to recover. International demand has been particularly smooth, hurting prospects for Boeing’s wide-body commercial aircraft, such as the 787 Dreamliner. The International Air Transport Association, a trade group representing the majority of the world’s airlines, said Tuesday that it expects demand for global passenger air travel to rebound to 2019 levels in 2024, another year. late than previously planned.
Boeing has increased liquidity with a monstrous $ 25 billion debt sale in April, the largest in Boeing’s history, to help weather the crisis.
Boeing executives will detail the results in a call at 10:30 am ET on Wednesday.
Read the full earnings release.
This story is unfolding. Please check for updates.
Correction: A table in an earlier version of this story said earnings per share. Boeing recorded a loss.
.
