NEW YORK: Boeing closed records for 2020 bruises by announcing another unpleasant surprise on Wednesday: $ 6.5 billion affected by delays in its new 777X aircraft that exacerbated the flying giant’s annual loss.
Boeing, which has seen its revenues devastated by the decline of commercial airlines sparked by the Covid-19 crisis and a 20-month grounding of the 737 MAX, expects the first delivery of the 777X wide plane in late 2023, compared to the previous schedule in 2022.
The 777X extension account pushed Boeing’s fourth-quarter loss to $ 8.4 billion, reducing its full-year 2020 balance to $ 11.9 billion in the red, its largest annual loss ever.
CEO Dave Calhoun said the past year has witnessed “profound societal and global disruption that has severely hampered our industry”.
“The profound impact of the epidemic on commercial air travel, along with grounding the 737 Max, has challenged our findings.”
In light of drastically deteriorating market conditions, Boeing has taken over the costs, announcing job cuts of nearly 30,000 employees over two years.
The company also completed a US $ 25 billion bond offering to provide liquidity to offset deflation.
Boeing executives confirmed that they expected a long-term recovery in travel demand, but stressed that it would take about three years for activity to return to pre-pandemic levels.
They warned that profit margins will be under pressure until demand returns and the company is able to increase aircraft production.
“I am very optimistic,” Calhoun said on a conference call with analysts.
“There is nothing in the market at the moment that has made me close that, but we are talking about 2023. It will take that long for us to get out of the world of Covid.”
Besides the challenge from the 777X delay, the fourth quarter included a number of other one-off findings: payments to the US Department of Justice to settle criminal charges related to the 737 Max accidents; Revised production schedule for the same aircraft; Production issues on the US military oil tanker KC-46; A pullback from meager demand for Boeing’s global services business.
The value of each of these items ranged between $ 275 million and $ 744 million.
Revenue in the fourth quarter decreased 14.6% to $ 15.3 billion.
As far as the 777X is concerned, Boeing has postponed the timeframe at least three times.
Boeing said the new delay reflects the need to incorporate lessons from the 737 MAX certification, as well as the uncertainty about airline demand due to the pandemic’s travel cutback.
Calhoun, in an interview with CNBC, said these changes mean “it will be a little more expensive and it will take a little longer” to certify the 777X.
But he said the plane – Ideal for international trips – It will be successful upon completion.
We love the plane, ”Calhoun said. “We believe she will be one of the true money makers for our company.”
The MAX saga has affected the company’s results over the past two years, but the outlook for this program has improved after the resumption of commercial flights on board in late 2020 after a long period of grounding due to two fatal accidents.
Since the model was approved to resume service, Boeing has introduced more than 40 MAX plans, and the aircraft has safely flown more than 2,700 commercial flights on five airlines.
On Wednesday, both the European Union’s Aviation Safety Agency and its British counterpart allowed MAX to return to service after lengthy reviews.
Calhoun expressed disappointment with the introduction of the coronavirus vaccine, saying he now expects a significant increase in travel in the second half of 2021 rather than early summer.
He told CNBC: “I think we all hoped that the vaccine would be distributed more smoothly.”
“I think it will come back. I’ve always said there will be strong demand when the time is right. There is a lot of pent-up demand.”
Peter McNally, an analyst at Third Bridge Group, said that Boeing’s results were “disappointing” in several ways and that the company continued to drain liquidity while waiting for the travel recovery.
McNally said the return of Max was good news, but that “the slower recovery and difficult financial position of Boeing will affect the rest of the aviation supply chain.”
Boeing shares tumbled 4.0% to $ 194.03 at the close of US trade.