Boeing took a larger-than-estimated loss in the last quarter, the group revealed Wednesday while confirming that further job losses are likely to occur as it faces a prolonged decline in air travel in the midst of an ongoing global health crisis.
The aerospace behemoth, which recently postponed its shareholders' dividend and disclosed a 10 percent downsizing of employees, also said that due to the poor outlook it will have to phase out the development of the iconic 747 jumbo plane and shift back manufacturing plans on other passenger jets. The decision is expected to result in more retrenchments.
The changes come as the company announced a $2.4 billion loss as the pandemic hammered demand in the aviation industry. The effects of the coronavirus crisis on the airline market continue to be severe, Chief Executive Dave Calhoun said.
Airline companies around the globe have responded to the pandemic by cutting the number of flight operations and deferring or suspending aircraft deliveries. British Airways became the latest this month to admit it was pulling the plug on all of its 747 jumbo planes – about 10 percent of its fleet – citing the drop in passenger demand. Qantas, the Australian carrier, has also retired the aircraft, which marked its 50th anniversary in 2019.
Calhoun pointed out that Boeing will ramp up its 737 production more slowly than expecterd. The 737 MAX has been grounded since March last year after two deadly crashes, but Boeing resumed some activity on the jets two months later after totally suspending work for a couple of months.
Calhoun also trimmed the production plans for the 777 and 787 and stressed that the company would stop making the 747 in 2022. He said their customer commitment does not stop at orders and that they will continue to support operations for the jumbo planes well into the future.
The cuts mark the aviation market's newest effort to handle turmoil that has wiped out air travel demand with oversupplied wide-body aircraft like the 787 Dreamliner and 777 falling deeper into an existing downturn. Boeing also remains vulnerable to frictions between China and the U.S., which has scrapped plans to acquire large U.S. planes.
In an interview with CNBC, the Boeing top executive said the latest increase in U.S. coronavirus cases made the near-term travel forecast very difficult because airline companies that had added flights in the wake of a momentary uptick in interest are now cutting back.
