New York, Apr 29 (efe-epa).- American aerospace giant Boeing said Wednesday it posted a net loss of $641 million in the first quarter of 2020, compared with $2.15 billion in profit in the same three-month period last year, as the Covid-19 pandemic and the worldwide grounding of its 737 MAX aircraft took a heavy toll on its business.
The Chicago-based company also announced Wednesday that it plans to slash 10 percent of its workforce – or around 16,000 employees – and reduce the production of several of its commercial jet models, including the 737 MAX.
In its earnings report, Boeing said its revenues fell by 26 percent to $16.9 billion and that its operating cash flow came in at negative $4.3 billion between January and March, but it added that it is “actively exploring all of the available options” for accessing additional liquidity and financing its operations.
“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” Boeing President and CEO David Calhoun said. “Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”
Although acknowledging that the pandemic is exerting unprecedented pressure on its business, Boeing said the company remains confident in its long-term future and is “progressing toward the safe return to service of the 737 MAX,” which has been grounded worldwide since March 2019 due to a pair of plane crashes in Ethiopia and Indonesia that left 346 dead and were blamed on a defect in that model’s flight-control system.
Boeing earned just over $6.2 billion in revenue from its Commercial Airplanes segment, down 48 percent from last year, while its first-quarter operating margin in that segment plunged to -33.3 percent due to lower delivery volume and abnormal production costs, including the temporary suspension of Puget Sound operations (in Washington state) in response to Covid-19.
Boeing said it will resume production of the 737 MAX at “low rates” in 2020 and gradually ramp up to 31 units per month in 2021, adding that the estimated abnormal production costs from the temporary suspension of production of its flagship aircraft have risen by around $1 billion to approximately $5 billion.
In the earnings report, Boeing noted the reduction in airline passenger traffic due to the novel coronavirus and said it is seeing “significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance.”
The steps the company has taken to mitigate the crisis have included a reduction in “commercial airplane production rates,” a “leadership and organizational restructuring to streamline roles and responsibilities” and “plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.”
Calhoun said in a conference call with analysts that the company is taking steps to reduce its workforce of 160,000 employees by 10 percent through year’s end, noting that 15 percent of the layoffs will occur in Boeing’s Commercial Airplanes segment.
In an effort to manage short-term liquidity, Boeing said it has taken steps that include drawing on a term loan facility, reducing operating costs and discretionary spending, suspending dividends and eliminating CEO and chairman pay for the year.
Boeing, which has lost around 60 percent of its market value this year, was up around 6 percent in afternoon trading on the New York Stock Exchange as investors welcomed news of production cuts and others moves in response to the changed market environment. EFE-EPA