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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.” 

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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.

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“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.

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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. 

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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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He is an aviation journalist and the founder of Jetline Marvel. Dawal gained a comprehensive understanding of the commercial aviation industry.  He has worked in a range of roles for more than 9 years in the aviation and aerospace industry. He has written more than 1700 articles in the aerospace industry. When he was 19 years old, he received a national award for his general innovations and holds the patent. He completed two postgraduate degrees simultaneously, one in Aerospace and the other in Management. Additionally, he authored nearly six textbooks on aviation and aerospace tailored for students in various educational institutions. jetlinem4(at)gmail.com

Aviation

Japan to Construct Second Passenger Jet Following First’s Setback

Japan to build the 2nd passngers jet after its first one has got failure

The Japanese government is set to collaborate with a private firm to construct a new passenger jet, a project expected to require approximately USD 33 billion. The anticipated outcome of this endeavor could materialize by 2035, aiming to significantly reduce carbon emissions and establish a new standard in eco-friendly aviation.

Japan is strategically focused on developing its passenger aircraft to compete globally, following a previous unsuccessful attempt with the Mitsubishi Regional Jet, which failed to gain approval from the FAA and other aviation authorities. After years of research, the decision was made to innovate by revamping the aircraft and introducing a unique hydrogen-powered engine concept.

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While concrete plans are yet to be finalized, discussions revolve around various propulsion technologies, including hybrid electric systems and hydrogen combustion or fuel cell technologies. Notably, hydrogen emerges as a prominent contender, with the Japanese Ministry of Economy, Trade and Industry (METI) emphasizing the importance of leveraging Japan’s competitive advantage in technological innovation to drive the decarbonization of air transport.

Video: The First MRJ regional Plane from Japan is scrapped in United States

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Numerous aerospace companies are already pioneering hydrogen-powered electric aircraft as a promising solution to combat carbon emissions. Companies such as ZeroAvia and Universal Hydrogen are at the forefront, with projects ranging from small regional planes to larger passenger aircraft, reflecting a concerted effort towards sustainable aviation.

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In parallel, collaborations between budget airlines like EasyJet, engine manufacturers like Rolls-Royce, and industry giants like Airbus underscore the collective commitment towards developing hydrogen-powered aircraft. Airbus, for instance, aims to introduce hydrogen-powered planes into commercial service by 2035.

Despite setbacks like the failed SpaceJet aircraft program, which incurred substantial costs without achieving liftoff, Japan remains undeterred. The country’s new aircraft venture indirectly challenges competitors like China’s COMAC C919, signaling Japan’s determination to carve out a significant presence in the aerospace industry.

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Additionally, Japan’s collaboration with Britain and Italy in developing a sixth-generation fighter jet highlights its pursuit of cutting-edge aviation technology. This advanced fighter jet, featuring Rolls-Royce engines, laser targeting systems, and three-dimensional thrust vectoring engine nozzles, represents a leap forward in military aviation capabilities.

Under an MOU agreement, Japan retains the option to export these fighter jets to allied nations, potentially reshaping the global landscape of military aircraft manufacturing and distribution. With these ambitious projects, Japan aims to assert itself as a leader in both commercial and military aviation, pushing the boundaries of innovation and sustainability in the aerospace sector.

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Aviation

Emirates denies report of near-miss air collision with Ethiopian Airlines

Emirates denies report of near-miss air collision with Ethiopian Airlines

Emirates has firmly refuted social media reports suggesting a near-miss air collision with an Ethiopian Airlines flight, asserting that there was no compromise to aircraft safety during the specified time and airspace.

In a statement issued by an Emirates spokesperson, it was emphasized that all Emirates aircraft are equipped with capabilities to ensure safe separation and distance during operations.

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The controversy arose when Somaliland Civil Aviation and Airports Authority initially attributed the incident to conflicting instructions from Mogadishu Control, alleging that Emirates flight UAE722 and Ethiopian Airlines flight ETH690, both cruising at 37,000 feet, were on a collision course. However, Emirates has rebutted these claims, maintaining that their aircraft were never in jeopardy.

According to the incident report released by Somaliland authorities, the potential collision occurred on Sunday, March 24, 2024, around 12:43 East Africa Time. The report detailed how conflicting instructions from Mogadishu Control led to the convergence of the two flights.

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Swift action by Somaliland’s Air Traffic Control (ATC) averted disaster, as the pilots of the Ethiopian Airlines Boeing 737 MAX promptly ascended to 39,000 feet, creating a safe distance between the two aircraft. Somaliland’s ATC, in collaboration with the Ethiopian Airlines crew, played a crucial role in preventing a potential catastrophe.

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Aviation

HAL’s Indigenous Tejas MK-1A completes its first maiden flight

The LCA Tejas Aircraft Crash: Understanding the Reasons - Air Marshal GS Bedi's Perspective

The inaugural flight of the first production series fighter of LCA Tejas Mark-1A, an advanced iteration of the LCA Mk-1 recently inducted by the Indian Air Force (IAF), completed its maiden flight in Bengaluru Today.

Over the past several days, the Defence PSU HAL has been conducting various taxi trials in preparation for this milestone.

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The maiden flight lasted 18 minutes and marked a triumph for the project. The Mk-1A boasts several enhancements, including digital radar warning receivers, an advanced AESA radar, improved beyond-visual-range (BVR) air-to-air missiles, and external self-protection jammer pods.

The upgraded Tejas Mark 1A aircraft features a larger cockpit canopy, enhancing the pilot’s outside visibility and facilitating better movement of their helmet. Additionally, the air intake has been redesigned to supply faster airflow to the engine, enhancing performance. Modifications to the vertical radar in the tail section have been made to improve control during turns. Overall, these upgrades elevate the aircraft’s standards compared to previous versions, providing increased comfort and functionality.

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Under a contract worth Rs 46,898 crore signed in 2021, HAL is mandated to deliver 83 Tejas Mk-1A jets between March 2024 and February 2028. This follows the completion of the order for 40 Tejas Mk1 jets valued at Rs 8,802 crore, of which 32 single-seat fighters and two twin-seat trainers have already been delivered.

The IAF, which currently operates two Tejas squadrons named ‘Flying Daggers’ and ‘Flying Bullets’, has deployed one squadron in the southwestern sector. Recognizing the significance of the Tejas in bolstering its fleet, the Defence Acquisition Council (DAC) has approved the acquisition of an additional 97 Tejas Mk-1A aircraft. However, the final clearance from the cabinet committee on security (CCS) is pending before the order can be placed.

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With the IAF grappling with a decline in the number of its fighter squadrons, which currently stands at 31 against the required 42 to effectively counter threats from China and Pakistan, the Tejas assumes a crucial role in filling this gap. Despite initial skepticism, the Tejas has evolved into a flagship platform for India, garnering attention and accolades at numerous defense and aerospace exhibitions worldwide.

However, it is essential to note that the IAF recently experienced its first loss of a Tejas Mk 1 fighter aircraft due to an air crash on March 12.

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Aerospace

South Korean KF-21 Completed First Successful Aerial Refueling

South Korean KF-21 Completed First Successful Aerial Refueling

The first aerial refuelling test of South Korea’s indigenous KF-21 Boramae fighter jet was successfully completed, marking a key milestone in the country’s defense capabilities.

Refueling from a Republic of Korea (ROK) Air Force KC-330 aircraft off the southern coast, the Boramae fighter jet took off from Sacheon Airbase, some 183 miles southeast of Seoul. The Defence Acquisition Programme Administration (DAPA) hailed this development, which represents a significant advancement for this state-of-the-art aircraft.

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The successful aerial refueling test corresponds with a staged production plan intended to ease worries brought forward by the feasibility assessment carried out a year ago. The research recommended cutting production to just 20 units and made additional test suggestions. A DAPA official continues to state that after discussions with pertinent agencies, plans are in place to conclude verification testing by June of this year and complete a contract for the remaining 20 units by February of the following year.

The kf 21, which has been compared to the Turkish KAAN and the Indian AMCA, has a more stealthy airframe than fourth-generation aircraft, but it is not yet capable of fifth-generation fighter capabilities. However, in the future, modifications such as internal weapons bays might force South Korea to reclassify it as a fifth-generation fighter. Even while South Korea has made significant strides towards constructing the KF-21, other countries, including Turkey and India, are also stepping up their efforts to push plans for creating fifth-generation fighter jets.

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As an initial phase, KAI boramae intends to manufacture a two-seat variant of the kai kf 21 boramae equipped with manned/unmanned teaming (MUM-T) capabilities. According to current plans, the Block 2 kf 21 fighter is slated for an upgrade to a low observability (LO) configuration, elevating it to the status of a fifth-generation fighter.

Additionally, KAI has put forward a proposal for the development of a Block 3 kf 21 boramae fighter jet, categorized as a sixth-generation fighter. This iteration would be larger, boasting enhanced stealth features and capabilities. It would incorporate more potent engines and operate within a comprehensive ‘system of systems’ framework, integrating with unmanned effectors for increased effectiveness.

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With the KF-21’s production set to start later in the year, DAPA intends to finalise an agreement with KAI by the beginning of 2024. The Republic of Korea Air Force (ROKAF) is expected to receive 120 KF-21 fighters by 2032.

The whole production plan for 40 kf21s has been approved by the Defence Project Promotion Committee, with an estimated cost of 7.92 trillion won (US$5.9 billion) between now and 2028.

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