The Boeing Company has reported first-quarter revenue of $16.9 billion, a loss of $1.35 billion primarily reflecting the impacts of COVID-19 and the 737 MAX grounding.
Boeing recorded operating cash flow of ($4.3) billion.
“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” said Boeing President and CEO David Calhoun.
“Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”
As the pandemic continues to reduce airline passenger traffic, Boeing says it sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance.
To align the business for the new market reality, Boeing is taking several actions that include reducing commercial airplane production rates. The company also announced a leadership and organizational restructuring to streamline roles and responsibilities and plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.
Boeing says it has taken action to manage near-term liquidity, as it has drawn on a term loan facility; reduced operating costs and discretionary spending; extended the existing pause on share repurchases and suspended dividends until further notice; reduced or deferred research and development and capital expenditures; and eliminated CEO and Chairman pay for the year.
It said that access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to recovery, and the company is actively exploring all of the available options. Boeing believes it will be able to obtain sufficient liquidity to fund its operations.
“While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long term future,” said Calhoun. “We continue to support our defence customers in their critical national security missions. We are progressing toward the safe return to service of the 737 MAX, and we are driving safety, quality and operational excellence into all that we do every day. Air travel has always been resilient, our portfolio of products and technology is well-positioned, and we are confident we will emerge from the crisis and thrive again as a leader of our industry.”
Boeing Commercial Airplanes has updated its production rate assumptions to reflect impacts from COVID-19 on its operations and demand outlook, and will continue to assess them on an ongoing basis.
The 787 production rate will be reduced from 14 per month to 10 per month in 2020, and gradually reduced to 7 per month by 2022. The 777/777X combined production rate will be reduced to 3 per month in 2021. At this time, production rate assumptions have not changed on the 767 and 747 programs.
Commercial Airplanes backlog included over 5,000 airplanes valued at $352 billion.
Global Services first-quarter revenue was $4.6 billion, reflecting higher government services volume, largely offset by lower commercial services volume due to COVID-19. (Table 6). First-quarter operating margin increased to 15.3 per cent primarily due to favourable government services performance.