Boeing cuts production rates to weather the COVID-19 storm

Boeing has reported significant cuts to production rates but better than expected cash reserves with a loss of US$2.39 billion for the 2^nd quarter and US$3.03 billion for the 1^st half of 2020. The company has an operating cash flow of US$5.3 billion, cash and marketable securities of US$32.4 billion and a backlog of $409 billion, including more than 4,500 commercial airplanes. READ: IATA says traffic will not recover till 2024. Boeing is to produce the 737 MAX at a rate of 31 a month by 2022 and may reduce it depending on the market demand. At its peak, the 737 rate was 57 and was tipped to go higher. The 787 production rate is to be reduced to 6 per month in 2021 - down from 13 -  and the 777/777X combined production rate will be gradually reduced to 2 per month in 2021, with 777X first delivery targeted for 2022.

However, the production rate assumptions have not changed on the 767 and 747 programs. Boeing President and Chief Executive Officer Dave Calhoun said “we remain 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.”

“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.” “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.” 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. 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.