A 777X lines up on the runway to conduct taxi and brake tests at Paine Field. (Photo: AirlineGeeks | Katie Bailey)
On Wednesday morning, Boeing reported an annual loss of $11.94 billion for 2020 based on its fourth quarter earnings, amounting to a record loss in its more than 100 years of operation. In the fourth quarter alone, Boeing accumulated an $8.44 billion loss, citing the significant impact of COVID-19, the 737MAX program, and its commercial widebody programs as factors for its loss.
For the full year of 2020, Boeing recorded a revenue of $52.8 billion, a 24% decrease from 2019. Quarter-wise, the company posted revenue of $15.3 billion, a 17% decrease from last year. Meanwhile, the company’s earnings per share registered at a whopping -$15.25, compared to a Wall Street estimate of $1.63. The stock fell about 4% in the trading following the announcement.
Boeing’s cash flow on the year was -$18.4 billion, with a -$4 billion negative cash flow in the fourth quarter alone.
On its commercial aircraft business, the manufacturer saw a 25% decrease in deliveries and a 37% decrease. During the year, Boeing saw 157 deliveries and $16.162 billion in revenue, which was a 59% and 50% decrease respectively. As reasoning for the loss in revenue, Boeing cites lower widebody deliveries due to the COVID-19 pandemic and Boeing 787 Dreamliner manufacturing issues.
For its defense, space and security programs, Boeing saw a 14% increase in revenue and a 1376% increase in profit to $502 million. During the year, Boeing racked up $1.53 billion in profit, a decrease of 41%.
Boeing’s CEO and President, Dave Calhoun, stated, “2020 was a year of profound societal and global disruption which significantly constrained our industry. The deep impact of the pandemic on commercial air travel, coupled with the 737 MAX grounding, challenged our results. I am proud of the resilience and dedication our global team demonstrated in this environment as we strengthened our safety processes, adapted to our market and supported our customers, suppliers, communities and each other.”
In its investor release, Boeing also announced the delay of the launch of its Boeing 777X to late 2023. Initially scheduled for a launch in 2020, the program has repeatedly been delayed, with the most recently cited launch date being 2022. Additionally, Boeing recorded a $6.5 billion reach-forward loss on the Boeing 777X.
Among the reasons for the delay and financial surcharge, Boeing stated that many factors including an “updated assessment of global certification requirements based on discussion with civil aviation authorities” and an “updated outlook on market demand based on continued dialogue with airline customers.” Ultimately, this results in adjustments to production rates and program accounting quality, along with other customer and supply chain impacts.
Many airlines have delayed the entry of their Boeing 777X. For example, Emirates pushed back the entry of the aircraft into its fleet to 2023. Meanwhile, Cathay Pacific has delayed the delivery of their first aircraft to past 2025. The launch customer of the Boeing 777X, Lufthansa, has recently retired a plethora of long-haul aircraft to account for the market conditions created by the COVID-19 pandemic. The retirements decrease the likelihood of the airline taking the Boeing 777X in the next couple of years.
Accordingly, Boeing has trimmed the forecast for how many aircraft it expects to produce during the program, from 400 aircraft to 350 aircraft.
The Boeing 777X is the successor to the airline’s successful Boeing 777 line, designed to replace the largest widebody aircraft in all airline’s fleets like the Boeing 747 and Airbus A380.
Amidst the challenging financial results, Boeing CEO Dave Calhoun expressed confidence for 2021, stating “Our balanced portfolio of diverse defense, space and services programs continues to provide important stability as we lay the foundation for our recovery. While the impact of COVID-19 presents continued challenges for commercial aerospace into 2021, we remain confident in our future, squarely-focused on safety, quality and transparency as we rebuild trust and transform our business.”
Additionally, with the recent un-grounding of the Boeing 737 MAX in Europe and the United Kingdom, it’s Boeing 737 MAX aircraft is starting to see a flightpath to recovery. This was further supported by Flair Airlines announced an order for 13 Boeing 737 MAX aircraft.
Looking long-term, Calhoun envisions that the next aircraft Boeing will produce won’t be powered with hydrogen or future propulsion tech, but with the conventional turbofan, according to Jon Ostrower. The future airliner will rely on biofuel to achieve carbon goals, with Calhoun stating that it’s the only possible solution from now to 2050.
Additionally, Calhoun, when asked about the development of A321XLR’s market competition to its position as a medium between the Boeing 737 MAX and Boeing 787 Dreamliner, stated, “You’re looking in the right place to where the next aircraft developments lean.”
These statements come after Boeing stated that it’s committed to producing aircraft that run on 100% sustainable fuel by 2023.
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