Boeing closed 2020 with the worst ever financial results in its history, on the back of an industry which stands decimated in the wake of the CoVid-19 pandemic, and the sustained grounding of the 737 MAX, its flagship narrowbody aircraft.
Boeing closed 2020 with an operational loss of USD 12.8 billion, which was 6.5 times the USD 2 billion loss posted in 2019. The net loss went up to USD 11.9 billion, going up from the USD 636 million loss in 2019. There are many reasons Boeing finds itself in this situation.
Boeing pushes first delivery of the 777X to 2023
Boeing has been facing delays in launching the new Boeing 777X aircraft, initially on account of design issues with the engines. The Boeing 777X flight testing programme only started in January 2020, after a long delay, and the plane’s first delivery was pushed to 2022 at that moment. The Boeing 777X was going to be the new flagship widebody aircraft of Boeing, and international air travel has tanked at the moment. Boeing had early moved the first delivery date to 2021, and then to 2022, more delay is on the line.
787 Deliveries to resume in 2021
Boeing has also been unable to deliver about 80 787 aircraft due to the pandemic and new production issues on these aircraft. No 787s have been delivered in November and December 2020, and no deliveries are planned for January 2021.
The aircraft maker’s 787 programme plans to transition its production rate to 5 per month in March 2021, at which point 787 final assemblies will be consolidated to Boeing South Carolina.
737 MAX costs add up
In the final quarter of the year, Boeing also added a charge of USD 468 million for abnormal production costs on the 737 MAX stemming from the jet’s grounding, partially offset by a lower 737 MAX customer consideration charge. Boeing has reported costs of more than USD 20 billion with respect to the 737 MAX crisis so far.
The 737 MAX aircraft was only recently recertified for flying by the FAA in November 2020, followed by some other regulators worldwide. The return to service of the 737 MAX in the U.S. and several other markets was an important step. Since the FAA’s approval to return to operations, Boeing has delivered over 40 737 MAX aircraft. Five airlines have safely returned their fleets to service as of January 25, 2021, safely flying more than 2,700 revenue flights and approximately 5,500 flight hours.
Boeing overall witnessed a year fraught with struggle and lost orders in 2020. Boeing had 655 cancelled orders for its aircraft in 2020. Not just that, the aircraft major only delivered 157 aircraft in 2020, down from the 380 delivered in 2019 and 806 before the 737 MAX was grounded globally. Now, with an industry seeing a downturn due to lack of travel demand, it will be a while before Boeing gets back to its high revenue high-profit growth. Clearing up the 400 strong backlogs of 737 MAX already produced will be a start to this route to profitability.
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