Boeing Earnings Report, Posts Wider Than Expected Loss

  • EPS: Loss of $1.70

  • Revenue: $16.91 billion

Boeing (BA) posted its first-quarter earnings report on Wednesday. The company recorded a $641 million loss and plans to cut its workforce and aircraft production in the world aviation market which has been affected by the coronavirus pandemic.

The coronavirus pandemic poses a threat to the aircraft maker, creating more problems for Boeing after it had already struggled from a 13-month grounding of its bestselling plane, the 737 Max.

The aircraft maker said it has serious plans of cutting payroll by 10% through both voluntary and “involuntary layoffs as necessary.” At the end of last year towards January this year, Boeing had about 160,000 employees.

“We’ll have to make even deeper reductions in areas that are most exposed to the condition of our commercial customers—more than 15% across our commercial airplanes and services businesses, as well as our corporate functions,” said CEO Dave Calhoun in a staff memo. He later said to reporters “higher percentages [of cuts] will be from the white-collar world.”

Boeing’s revenue plunged from a year earlier to $16.91 billion, with an adjusted per-share loss of $1.70. In the same period a year ago, the company posted a $2.15 billion profit. Analysts expected the aircraft maker to post a per-share loss of $1.61 and revenue of $17.30 billion, but the company posted wider than expected loss.

In its struggle to keep up with rising cancellations and a shortage of orders, the company burned about $4.7 billion in cash during the first quarter. In an interview Calhoun told CNBC, the world aviation’s market is “frozen” because of the coronavirus pandemic and the “industry is not interested in taking delivery of aircraft at the moment.”

Generally, air travel in the U.S. is down 95% from a year ago. Calhoun told shareholders on Monday that there was a probability of air travel demand recovering after two to three years to a 2019 level.

“The pandemic is also delivering a body of blow to our business—affecting airline customer demand, production continuity, and supply chain stability,” said Calhoun in a staff memo. Also stating that “commercial airline travel has fallen off a cliff.”

In addition to cutting payroll by 10%, Boeing said it also plans to reduce aircraft production, including reducing the output of 787 Dreamliners to 10 per month, from 14 this year and later 7 per month by 2022. However, it will slowly bring back the production of the 737 Max with an estimated output of 31 per month by 2021.

Boeing Outlook

  • Lower production rates

  • More job cuts possible

  • Airline recover in 2023

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