Photo taken on Jan. 26, 2018 shows interior of the final assembly building in Boeing South Carolina in North Charleston, South Carolina of the United States. (Photo: Xinhua)
The Boeing Company on Wednesday reported second-quarter revenue of 11.8 billion U.S. dollars, GAAP loss per share of 4.20 dollars, and operating cash flow of 5.3 billion dollars, primarily reflecting the impacts of COVID-19 and the 737 MAX grounding.
Boeing's 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 U.S. dollars in the quarter compared to a 5.6 billion dollars charge in the same period last year.
The company's second-quarter operating margin was also negatively impacted by 712 million dollars of abnormal production costs related to the 737 program, 468 million dollars of severance expense and 133 million dollars of abnormal production costs from the temporary suspension of operations in response to COVID-19.
Global Services second-quarter revenue decreased to 3.5 billion U.S. dollars, driven by lower commercial services volume due to COVID-19, partially offset by higher government services volume. At quarter-end, Capital's net portfolio balance was 2.1 billion dollars, the company said.
The COVID-19 pandemic has significantly impacted air travel and reduced near-term demand, resulting in lower production and delivery rate assumptions.
In Commercial Airplanes Programs, Boeing has delivered a total of 20 aircraft in the second quarter of 2020. The delivery included two 777Fs to China Southern Airlines in May. The backlog included over 4,500 airplanes valued at 326 billion U.S. dollars.
The 737 program resumed the early stages of production in May and expects to continue to produce at low rates for the remainder of 2020. The 787 production rate will be reduced to six per month in 2021. The 777/777X combined production rate will be gradually reduced to two per month in 2021, with 777X first delivery targeted for 2022. Production rate assumptions have not changed on the 767 and 747 programs at this time, according to Boeing.
"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."
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.
Boeing continued to deliver across key commercial, defense, space and services programs, and completed the Federal Aviation Administration certification flight tests, the company said.
"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.