A Boeing 737 MAX airplane. (File photo: Agencies)
Boeing on Wednesday reported a first-quarter loss of $641 million as the aircraft manufacturer faced continued turbulence from the coronavirus pandemic and the yearlong grounding of the 737 MAX.
Air travel has collapsed and many carriers have canceled or delayed orders for new aircraft. The MAX, Boeing's top-selling plane, has been grounded more than a year after crashes in Indonesia and Ethiopia killed a total of 346 passengers and crew.
For the same period a year earlier, Boeing reported a profit of $2.15 billion. Revenue this quarter fell to $16.9 billion from $22.9 billion a year ago.
"The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability," Boeing's CEO David Calhoun said in a statement.
"While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long-term future. "We are progressing toward a safe return to service of the 737 MAX."
He said Boeing's mix of civilian jets and defense products assures a solid foundation for future growth despite the current downturn.
Boeing reported first quarter revenue of $16.91 billion, failing to meet Wall Street estimates of $17.30 billion. The company plans to cut production of some aircraft, including the wide-body 787 Dreamliner, and lay off about 10 percent of its workforce.
In January, Boeing reported a loss of $636 million for fiscal year 2019 compared with a profit of $10.46 billion in 2018 – its first annual loss in more than 20 years. Boeing suspended dividends in March to conserve cash. The CEO agreed to forego pay through 2020.
Boeing said it planned to cut production of the 787 to seven a month after an initial reduction to 10 from 14. But the company said it planned to resume production of the 737 MAX, starting slowly and rising to 31 a month.
Boeing hopes the MAX will return to commercial service this summer, but the Federal Aviation Administration has said there is no deadline for recertification of the jet.
Earlier this month, top competitor Airbus said it planned to cut production by one-third.
Boeing has drawn on a loan of about $14 billion and sought $60 billion in federal aid, but has rejected a proposal to give the government an equity stake in the company in return for assistance.
US air travel is down about 95 percent from a year ago. Calhoun warned it could take two or three years for demand to return to 2019 levels, an assessment supported by earnings of two major companies.
Southwest Airlines, the largest domestic carrier, reported a loss of $94 million in the first quarter – its first since 2011. The company said revenue fell about 18 percent after bookings declined in February amid fears of the coronavirus pandemic.
A rebound in air travel will be slowed if the US economy slides into a prolonged recession following government-imposed stay-at-home orders intended to curb spread of the coronavirus, Gary Kelly, Southwest's CEO, told investors and analysts Wednesday on a conference call.
"Realistically, we just can't expect that things are going to be back to normal in six or 12 months," he said.
General Electric, a builder of aircraft engines, said profit in its aviation unit fell 40 percent in the first quarter as new engine sales declined 45 percent and commercial repairs fell 60 percent. The company sees no improvement in the second quarter.
In a statement, GE said its aviation business faces an "unprecedented decline" in 2020 and warned that it "cannot forecast with reasonable accuracy the full duration, magnitude and pace of recovery across out end markets, operations and supply chains."
GE has announced furloughs and job cuts in its aviation unit. On Wednesday, the company said more cuts are likely.