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Boeing lost $2.4 billion in three months and to end 747 production and warns of job cuts

CHICAGO, July 29, 2020 /PRNewswire/ — 

  • Financial results continue to be significantly impacted by COVID-19 and the 737 MAX grounding
  • Revenue of $11.8 billion, GAAP loss per share of ($4.20) and core (non-GAAP)* loss per share of ($4.79)
  • Operating cash flow of ($5.3) billion; cash and marketable securities of $32.4 billion
  • Total backlog of $409 billion, including more than 4,500 commercial airplanes

The Boeing Company [NYSE: BA] reported second-quarter revenue of $11.8 billion, GAAP loss per share of ($4.20) and core loss per share (non-GAAP)* of ($4.79), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($5.3) billion. 

“We remained focused on the health of our employees and communities while proactively taking action to navigate the unprecedented commercial market impacts from the COVID-19 pandemic,” said Boeing President and Chief Executive Officer Dave Calhoun. “We’re working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side.” 

In the second quarter, Boeing restarted production operations across key sites following temporary pauses to protect its workforce and introduce rigorous new health and safety procedures. Despite the challenges, Boeing continued to deliver across key commercial, defense, space and services programs. The company also resumed early stages of production on the 737 program with a focus on safety, quality and operational excellence. Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737, including completion of FAA certification flight tests.

To align to the sharp reduction in commercial market demand in light of COVID-19, the company is taking several actions including further adjusting commercial airplane production rates and reducing employment levels.

“The diversity of our balanced portfolio and our government services, defense and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to adapt for new market realities,” Calhoun said. “We are taking the right action to ensure we’re well positioned for the future by strengthening our culture, improving transparency, rebuilding trust and transforming our business to become a better, more sustainable Boeing. Air travel has always proven to be resilient – and so has Boeing.”

Operating cash flow was ($5.3) billion in the quarter, primarily reflecting lower commercial deliveries and services volume due to COVID-19 and the 737 MAX grounding, as well as timing of receipts and expenditures

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Cash and investments in marketable securities increased to $32.4 billion, compared to $15.5 billion at the beginning of the quarter, driven by the issuance of new debt (Table 3). Debt was $61.4 billion, up from $38.9 billion at the beginning of the quarter due to the issuance of new debt, partially offset by repayment of maturing debt.

Total company backlog at quarter-end was $409 billion.

Commercial Airplanes second-quarter revenue and operating margin decreased reflecting lower delivery volume, partially offset by a lower 737 MAX customer consideration charge of $551 million in the quarter compared to a $5.6 billion charge in the same period last year. Second-quarter operating margin was also negatively impacted by $712 million of abnormal production costs related to the 737 program, $468 million of severance expense and $133 million of abnormal production costs from the temporary suspension of operations in response to COVID-19.

The 737 program resumed early stages of production in May and expects to continue to produce at low rates for the remainder of 2020. The COVID-19 pandemic has significantly impacted air travel and reduced near-term demand, resulting in lower production and delivery rate assumptions. Commercial Airplanes expects to gradually increase the 737 production rate to 31 per month by the beginning of 2022, with further gradual increases to correspond with market demand. Estimated potential concessions and other considerations to customers related to the 737 MAX grounding increased by $551 million in the quarter. There was no material change to estimated abnormal production costs. 

Commercial Airplanes has further updated its production rate assumptions this quarter to reflect impacts of COVID-19 on its demand outlook, and will continue to assess them on an ongoing basis. The 787 production rate will be reduced to 6 per month in 2021. The 777/777X combined production rate will be gradually reduced to 2 per month in 2021, with 777X first delivery targeted for 2022. At this time, production rate assumptions have not changed on the 767 and 747 programs.

Commercial Airplanes delivered 20 airplanes during the quarter, and backlog included over 4,500 airplanes valued at $326 billion.

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Aviation

Air India Successfully Completes Its First A350 Flight from Delhi-New York

Air India Successfully Completes Its First A350 Flight from Delhi-New York

Air India has officially launched its new wide-body flagship, the Airbus A350 aircraft, on the highly anticipated Delhi-New York route, marking the aircraft’s ultra-long-haul debut.

This milestone signifies the induction of the first new aircraft type by an Indian carrier in over a decade. With this development, Air India is set to deploy the A350 on its non-stop flights to North America, with plans to introduce the aircraft on the Delhi-Newark route starting January 2, 2025.

Lufthansa Introduces A350 with Allegris Suites on Bengaluru-Munich Route

Additionally, the airline announced the upcoming launch of inflight Wi-Fi service on international flights operated by the A350, enhancing the passenger experience.

On November 1, 2024, the air india Airbus A350-900 took off from Indira Gandhi International Airport (DEL) in Delhi at 02:49 local time and successfully landed at New York’s JFK Airport approximately 15 hours later, at 07:47 local time.

This journey follows Air India’s first-ever A350-900 flight, which took off from Bengaluru Kempegowda Airport (BLR) to Mumbai Chhatrapati Shivaji Airport (BOM) on January 22, 2024.

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Air India’s US Service Takes a Hit with 60 Flight Cancellations This Peak Season

In a statement released on November 1, 2024, an Air India spokesperson expressed enthusiasm, stating, “Our A350 is NYC-bound for the first time ever! Now enjoy the all-New Air India experience when you fly between Delhi and New York JFK.”

air india new routes currently operates long-haul flights to major destinations including Washington, D.C., Chicago, and San Francisco with its Boeing wide-body fleet.

Passenger feedback regarding the A350 air india retrofit and the new customer experience has been overwhelmingly positive since its introduction on the Delhi-London Heathrow route in September. Managing Director and CEO Campbell Wilson noted, “We are excited to now bring it to New York.”

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