Boeing cuts widebody production after $641m loss
Boeing has slashed 787 and 777 production and resumed a "low rate" 737 Max ramp up after burning through $4.3 billion in cash during the first quarter.
It had a positive cash flow of $2.8 billion in the year-earlier period.
The Chicago-based OEM reported a loss of $641 million in the three months to 31 March on revenue of $16.91 billion, which fell 26% from a year earlier.
Boeing said it is "exploring all of the available options" to secure additional liquidity. Cash and equivalents grew to $15.5 billion from $10 billion in the fourth quarter; however, debt climbed to $39 billion from $27.3 billion.
Total company backlog at quarter-end was $439 billion. It remains investment grade at Baa2/BBB.
Boeing Commercial Airplanes' first-quarter revenue fell 48% to $6.2 billion reflecting "lower deliveries driven by the 737 Max grounding as well as impacts of COVID-19".
First-quarter operating margin decreased to (33.3)% due to lower delivery volume, $797 million of "abnormal production costs" from the temporary suspension of the 737 Max, a $336 million charge related to 737 Next Generation frame fitting component (pickle fork) repair costs, lower 787 margins and $137 million of production costs from the temporary suspension of Puget Sound operations.
Its 737 Max aircraft production will resume at "low rates in 2020" as timing and conditions of return to service are "better understood" and gradually increase to 31 per month during 2021, with further gradual increases to correspond with market demand.
The production costs from the temporary suspension of 737 Max production have increased by approximately $1 billion, bringing the estimated total to roughly $5 billion.
Fewer widebodies
Boeing Commercial Airplanes updated its production rate assumptions to reflect "impacts from COVID-19" on its operations and demand outlook.
The 787 production rate will be reduced 10 per month from 14 in 2020, and gradually reduced to seven by 2022. The 777/777X combined production rate will be reduced to three per month in 2021. At this time, production rate assumptions have not changed on the 767 and 747 programmes.
Commercial Airplanes delivered 50 aircraft during the quarter, including 29 787s. Commercial Airplanes captured an order for 12 787 aircraft for All Nippon Airways and produced the 1,000th 787 at Boeing South Carolina.
The backlog included over 5,000 aircraft valued at $352 billion.
At quarter-end, Boeing Capital's net portfolio balance was $2.2 billion.
Global Services first-quarter revenue was $4.6 billion, reflecting higher government services volume, primarily offset by lower commercial services volume due to COVID-19. First-quarter operating margin increased to 15.3% primarily due to favourable government services performance.
"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 chief executive offer David Calhoun.
"While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long term future," he adds. "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."