Denver, Frankfurt Boeing chief David Calhoun attuned his employees to further, clear cuts. The Chicago-based company reported a quarterly loss of $ 2.4 billion and a 25 percent drop in sales to $ 11.8 billion. Both turned out even worse than expected in advance. The past quarter is the first for America’s corporations to be completely affected by the corona crisis, giving an insight into the difficult situation the pandemic has put the economy in.
Boeing announced plans to cut back or stop production for a number of models. In addition to the aftermath of the pandemic, the group is struggling with homemade problems related to the ban on the former best-seller 737 Max, which also has an impact on finances.
Now, among other things, the production of the Boeing 777 and the new edition 777X will be reduced from three to two planes per month next year. Production of the long-haul jet 787 “Dreamliner” will also be cut back, as will the 737 Max, whose production is only slowly starting up again.
Boeing also announced the long-awaited suspension of the now legendary 747 wide-body aircraft. The last jumbo jet is scheduled to be delivered in 2022, as long as the remaining orders take a long time to be processed. According to industry circles, Boeing recently ordered parts for new production from suppliers more than a year ago. The former largest passenger aircraft in the world has been built since 1969, most recently the 747 was ordered less and less for efficiency reasons and was often discarded from airlines. Calhoun justified the step with the current market development.
Only 20 machines delivered
The US aircraft manufacturer had previously announced that it would cut ten percent of its 160,000 jobs worldwide. But given the company’s severe crisis, that would not be enough, Calhoun announced in a letter to his employees on Wednesday. He left details open. According to analysts, the quarterly figures suggest another ten thousand job cuts.
Air traffic has collapsed since the pandemic began in early March. Due to the poor crisis management of the US government, the virus spreads almost uncontrollably in many parts of the country, the economic recovery is therefore slow to come. The airlines actually wanted to expand their flight plans again in the summer. Instead, mass layoffs have been announced for autumn. Until then, they have to keep jobs – that was an important condition that the US government had tied to its billions in government aid.
Boeing chief Calhoun assumes that it will take about three years before passenger numbers reach the level of 2019 again. This makes it more optimistic than the industry association IATA, which does not expect air traffic to normalize until 2024. The airlines therefore do not need new machines.
At Boeing, as with its European competitor Airbus, aircraft that have already been ordered and produced are therefore not collected. Boeing delivered only 20 aircraft in the second quarter, the least since 1977. A year ago there were 90.
That drains Boeing’s cash reserves and its suppliers. Customers typically pay more than half the purchase price when they pick up the plane. “We get calls every day from customers who want to postpone deliveries,” Calhoun told CNCB.
To secure liquidity, Boeing had already suspended dividends and share buybacks, cut costs, and stocked $ 25 billion in bonds on the capital market. This was only possible thanks to the support from the US Federal Reserve, which had cleared blockages on the capital market in March. According to Calhoun, the buffer should be enough to get through the crisis.
Progress at 737 max
The Boeing boss, who has been in office since January, was optimistic with regard to the approval of the 737 Max. After two crashes due to design errors, the former bestseller has not been allowed to take off since March 2019. The US aeronautical regulator FAA has recently completed the flight tests, the evaluation of the data is ongoing. The authorities of other countries are also working on a new registration of the aircraft.
However, many buyers have withdrawn from their contracts or plan to do so. In the first half of 2020 alone, a total of 355 737 Max orders were canceled.
The aircraft manufacturer’s defense division could receive support from the US government in the coming months. The congress is negotiating another billion dollar aid package for the economy. The republican-led Senate’s draft also envisages $ 8 billion for arms suppliers – alongside Boeing, Lockheed Martin and General Dynamics could also benefit. Boeing shares lost almost 50 percent of their value this year, but have recovered significantly from the lows in March.
More: Airplane for sale – Airlines want to get rid of passenger aircraft.