Results show Boeing hit hard by both Covid-19 and continued 737 MAX grounding

31st July 2020 By: Rebecca Campbell - Creamer Media Senior Deputy Editor

Giant US aerospace group Boeing has reported that its revenues for the first half of this year (1H20) were 26% down on those for the same period last year (1H19). In numbers, 1H20 revenues came to $28.72-billion as against $38.67-billion in 1H19. It suffered a net loss of $3.04-billion in 1H20 against a net loss of $0.79-billion during the same period last year. For the first half of this year its operating cash flow came to minus $9.58-billion, in sharp contrast to $2.2-billion during 1H19. 

The commercial airplanes business saw revenues fall 53% to $7.84-billion in 1H20 from $16.54-billion in 1H19. However, the revenues of the defence, space and security business declined only slightly over the same period – by just 4%. Or, in monetary terms, to $12.63-billion in 1H20 from $13.17-billion in 1H19. The global services business saw a somewhat larger fall of 11% in revenues during the first half of this year, in comparison to the same period last year – or, in figures, to $8.12-billion from $9.16-billion.

Commercial aircraft deliveries during 1H20 were 71% down on those for 1H19. In terms of numbers, Boeing delivered 70 airliners during the first half of this year, as against 239 during the first half of last year. 

While Boeing as a whole was affected by the Covid-19 pandemic, the effect was particularly severe on the commercial airplanes business. This exacerbated the prior impact of the grounding of the 737 MAX airliner.   

In parallel with the release of these results, Boeing president and CEO Dave Calhoun issued a letter to the group’s employees. In it, he stressed the importance of the health and safety of Boeing personnel and that this continued to be a priority for the group.

“The reality is the pandemic’s impact on the aviation sector continues to be severe,” he wrote. “That’s why we’ve been taking decisive actions. To bolster our near-term liquidity, we suspended our dividend, terminated our share repurchasing programme, reduced discretionary spending and overhead costs, and issued $25-billion in new debt. While these steps help us navigate the pandemic, they don’t change the fact that the commercial marketplace is different, and we must change with it. To align to a smaller market, we lowered commercial production rates and took tough workforce actions throughout the [second] quarter.”

Consequently, in addition to the already announced 10% cut in its workforce (being carried out across the year), the group was going to have to consider whether further staff reductions were necessary. He recognised that this would cause greater uncertainty for workers and promised to minimise the impact.

In addition, he announced that Boeing was again going to cut the production rate of most of its commercial aircraft. The combined production rate for the 777 and 777X would now be only two a month during next year, down from the previously announced three a month. The production rate of the 787 would be cut again, to six a month for next year. The ramp up of 737 production would be slower than previously planned, reaching 31 a month by the start of 2022. Production of the 767 and 747 would not be cut, but the 747 – the famed Jumbo jet – would cease to be built in 2022 (although Boeing will support the type long into the future).

“The diversity of our portfolio and our government services, defence and space programmes provide some stability in the near term as we take these tough but necessary steps,” stated Calhoun. “And we’ll continue working to meet our commitments and deliver on our priorities. As we look to the future, we are also focused on not just adapting and recovering but also emerging stronger and more resilient.”