Boeing Reports Second Quarter Net Loss of $2.4 Billion on 25% Revenue Decline to $11.8 Billion
Boeing reported on Wednesday a second quarter net loss of $2.4 billion or $4.20 per share on a 25 percent year-over-year revenue decline to $11.8 billion. At the close of the quarter, the aerospace giant had $32.4 billion in cash and marketable securities.
Today (July 29, 2020), Boeing reported a second quarter net loss of $2.4 billion or $(4.20) per share on a 25 percent year-over-year revenue decline to $11.8 billion. The company’s operating cash flow for the quarter was $(5.3) billion and the aerospace giant ended the quarter with $32.4 billion in cash and marketable securities. At the close of the quarter, Boeing had a backlog valued at $409 billion including over 4,500 commercial airplanes. The company’s expected second quarter loss is largely attributable to the impacts of the global COVID-19 pandemic as well as the continued grounding of the Boeing 737 MAX, which is expected to return to service by year’s end. In Wednesday’s announcement, Boeing’s President and Chief Executive Officer Dave Calhoun said,
“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. 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, defenses and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to adapt to the new market realities. 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.”
During the second quarter, Boeing restarted production across key sites after a temporary pause to protect their team members by introducing rigorous new health and safety protocols. Additionally, early production stages for the company’s 737 program were resumed with a focus on safety, quality and operational excellence. Boeing also made progress in the return to service of the 737 MAX with completion of the FAA's certification flights and the company adjusted production rates and employee levels to align with the current market demand environment.
Reflecting lower delivery volume, Boeing Commercial Airplanes division revenues decreased 65 percent year-over-year to $1.6 billion. Operating losses for the unit declined substantially year-over year due to a lower 737 MAX customer consideration charge of $551 million, compared to $5.6 billion in the second quarter of 2019. Commercial Airplanes' Q2 operating margin was also impacted by $712 million in abnormal 737 production costs, $469 million in severance expenses and $133 million in expenses attributable to the temporary suspension of operations. During the second quarter, Boeing delivered 20 commercial airplanes versus 90 in the second quarter of 2019. For the first half of 2020, the company delivered 70 commercial airplanes versus 239 during the first two quarters of last year.
Boeing will ramp-up 737 production at a lower rate than previously planned with a gradual increase to 31 airplanes per month by the start of 2022. The company will reduce 777/777X production to two per month in 2021, one unit lower than previously announced. Additionally, 787 Dreamliner production will be reduced from ten to six in 2021, increasing to seven per month in 2022. Boeing is evaluating 787 production efficiencies, including the possibility of consolidating production lines at one facility. Currently, 767 and 747 production rates remain unchanged and the company plans of delivering their final iconic 747 in 2022.
In trading Wednesday morning, shares in Boeing Company (NYSE: BA) were trading 3.39 percent lower at $165.11/share (10:27 AM EDT).