This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.
The Covid-19 pandemic and 737 Max grounding continue to pound Boeing, which recorded another consecutive loss in profit in the third quarter and plans to shed more jobs by the end of next year, the commercial airframer announced today. “The global pandemic continued to add pressure to our business this quarter, and we're aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient, and more sustainable for the long term,” said Boeing president and CEO Dave Calhoun.
However, Calhoun told analysts on a conference call that he expects 737 Max deliveries to resume in the fourth quarter following “rigorous” certification and validation flights with the FAA, EASA, and Transport Canada, totaling 1,400 test and check flights and more than 3,000 flight hours. “Of course, the actual time will ultimately be determined by the global regulators,” he said.
Boeing CFO Greg Smith noted that 450 Max aircraft have been built and are being stored in inventory. “We expect to have to remarket some of these aircraft and potentially reconfigure them, which will extend the delivery time frame,” he said. About half of the Maxs in storage will be delivered by the end of next year, with most of the remainder delivered in 2022. The company also has “a large number” of 787s that haven’t been delivered due partly to quality issues with finished Dreamliners, Smith said.
“We are working with our customers to facilitate their deliveries,” he said. “The burn-down of 787 inventory over the next few months will largely be influenced by the pace of delivery activities, which have been and are expected to be relatively slow due to the additional time we’re taking to inspect and ensure each of our 787s are delivered to our highest quality standards.”
Because international passenger traffic recovery has been weak and more challenging than Boeing anticipated in the previous two quarters, Smith and Calhoun said the company is closely watching demand for widebodies, including the 787—production of which is set to drop from 10 a month to six a month next year.
“International passenger traffic recovery remains challenged by the absence of a coordinated global policy on cross-border entry protocols,” Calhoun said. “The path ahead will be heavily dependent upon not only the virus but also wide-scale progress on rapid testing, coordinated policy to alleviate travel restrictions, and timing and availability of a vaccine.”
Calhoun also explained that because of the deeper impact of Covid-19 on Boeing and its airline customers, the company will be eliminating more jobs than it previously expected. He told analysts that by the end of next year Boeing’s pre-Covid workforce of 160,000 will be whittled to 130,000. “Each of our business units and functions will carefully make staffing decisions and prioritize natural attrition and stability to limit the impact on our people and our business,” Calhoun said.
In the third quarter, Boeing reported a net loss of $466 million on revenue of $14.13 billion. That compares with third-quarter 2019 net profit of $1.16 billion on revenue of $19.98 billion. For the nine months of 2020, the company recorded a net loss of $3.5 billion on revenue of $42.85 billion, compared with $374 million net profit on revenue of $56.64 billion in the same span last year.