Big loss for Boeing on weaker demand for planes
Boeing lost US$8.4 billion in the fourth quarter — capping a record loss for all of 2020 — as the pandemic undercut demand for planes, and the company announced another costly delay to its new large jetliner designed for long-haul flights.
Most of Boeing’s troubles over the past two years have swirled around the troubled 737 Max. However, the biggest piece of the fourth-quarter loss reported on Wednesday was a pre-tax charge of US$6.5 billion tied to a different plane, the bigger 777X.
It all added up to a record full-year loss of US$11.94 billion.
“2020 was a year of profound societal and global disruption which significantly constrained our industry,” CEO David Calhoun said in a statement. “The deep impact of the pandemic on commercial air travel, coupled with the 737 Max grounding, challenged our results.”
Orders for new Boeing jets have tanked in the past two years, first from the worldwide grounding of the Max after two crashes that killed 346 people, then from a pandemic that devastated the airline industry. In the last few months, production flaws have halted deliveries of the 787, which Boeing calls the Dreamliner.
Deliveries have also plummeted, starving Boeing of much-needed cash. Boeing delivered 59 commercial planes in the fourth quarter, compared with 225 for European rival Airbus. Boeing’s fourth-quarter revenue fell 15 per cent to US$15.3 billion.
The plane maker’s newest problem involves the 777X, a larger version of the long-range 777 that will feature new engines and composite wings that fold near the wing tips to accommodate limited space at many airport gates.
The company said on Wednesday that the first 777X delivery will occur in late 2023, three years behind the original schedule and a year later than Boeing announced just six months ago. Boeing cited new, tougher standards for certifying planes — an outgrowth of the Max crisis — and the damage that the pandemic is doing to demand for international travel.
The 737 Max, a mid-size plane used mostly on short- and medium-range flights, only recently returned to flying after being grounded worldwide for 20 months. Five carriers, including American Airlines, have resumed using the Max and have flown more than 2,700 flights since early December.
This month, Boeing Company avoided criminal prosecution over the Max by agreeing to pay US$2.5 billion, and admit that two former employees misled regulators about the plane’s safety. Family members of passengers who died in the crashes complained about the settlement, most of which Boeing had already set aside to pay airlines.