Boeing Co on Wednesday reported a $2.4bn loss for the second quarter due to the grounding of its troubled 737 Max jet and continuing fallout from the coronavirus pandemic that has gutted air travel.
“The reality is the pandemic’s impact on the aviation sector continues to be severe,” CEO David Calhoun told analysts. “This pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend – all of which affects our business and, ultimately, our bottom line.”
Calhoun said it will take “around three years” to return to 2019 passenger levels.
On Tuesday, the International Air Transport Association said air travel will not recover to pre-pandemic levels until at least 2024, a year longer than its previous forecast, as the United States and other countries continue to struggle to contain the coronavirus.
A severe contraction in air travel in the wake of the pandemic has pushed major airlines to the brink of bankruptcy, compelling many of them to defer aircraft deliveries – a critical source of cash for Boeing.
So far this year, Boeing deliveries of new airliners are down 71 percent. The company recorded 59 orders but 382 cancellations, mostly for the beleaguered Max, which remains grounded after two crashes killed 346 people.
Another 323 orders, also mostly for Max planes, were removed from Boeing’s backlog because of uncertainty about the deals going through.
The 737 MAX grounding has cost the planemaker some $20bn, forced out executives, halted production and hobbled its supply chain, with criminal and US congressional investigations and lawsuits still ongoing.
Boeing also announced it is slashing production on its wide-bodied jet programmes. It is reducing 787 production to six jets a month in 2021 – a third rate drop from a year ago, when it was producing the Dreamliners at a record monthly rate of 14 planes.
It is also reducing – again – the combined production rate of the 777 and 777X jets to two planes per month in 2021, while delaying the 777X’s entry into service by up to a year.
And Boeing confirmed on Wednesday that the last 747, the iconic hump-topped jumbo jet that democratised global air travel in the 1970s but fell behind modern twin-engine aircraft, would roll out of its Seattle-area factory in around two years.
The second quarter would have been worse for Boeing if not for its defence and space business, which depends on contracts with governments and has been largely insulated from the pandemic. Revenue in that business was flat compared with a year ago.
Still, the company has been forced to lay off thousands of workers, cut spending, suspend its dividend. It also issued $25 in new debt on the private market, which avoided the need to take coronavirus relief money from the federal government this spring.