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Home / Business / Boeing expects third-quarter earnings to improve, but warns of layoffs due to the weight of the 737 MAX due to the coronavirus

Boeing expects third-quarter earnings to improve, but warns of layoffs due to the weight of the 737 MAX due to the coronavirus



Boeing (BA) warned that Boeing (BA) reported on Wednesday that its third-quarter loss was lower than expected and revenue increased, but the double crisis caused by the COVID-19 pandemic and its idle 737 MAX flagship aircraft is likely to result Mass layoffs.

According to the consensus forecast compiled by Bloomberg, the following are the key indicators in the report and Wall Street’s expectations:

  • Revenue: 14.1 billion USD, compared to the expected 13.84 billion USD

  • Adjusted loss per share: 1.39 cents, compared to an estimate of $2.384

  • GAAP loss was 79 cents, lower than expected 1

    .588

  • Operating cash flow: US$ 4.82 billion

The company said in its earnings report that it continues to make “steady progress” in returning the flagship aircraft to normal operations. Boeing still warned that due to the coronavirus and grounded aircraft “significantly affected” the company’s earnings, efforts to reshape the company will result in a reduction in the number of employees.

At the same time, it consumed nearly $5 billion in the third quarter, more than twice its loss in the same period in 2019.

The company said: “As the company adjusts its business scale to adapt to market realities, Boeing hopes to continue to reduce the overall staffing through natural layoffs, voluntary and involuntary layoffs, and record additional severance payments in the third quarter.”

In premarket trading, as investors were encouraged by the encouraging results, the company’s stock price rose more than one percent from Tuesday’s closing price. However, Boeing’s share price is currently close to $155, a small fraction of its 52-week high of $375 or more.

For most of the past two years, Boeing’s trouble with the 737 MAX has occupied a major part of the agenda and has weakened the public’s trust in the company, while also causing more and more regulatory reviews. Last week, the “Wall Street Journal” reported that Boeing is quietly assessing interest in a new aircraft, which may help the troubled aerospace giant to reverse the 737 MAX crisis.

The President of Boeing said: “The global pandemic continues to put pressure on our business this quarter. We are adapting to this new reality by closely managing liquidity and transforming the company into a more sensitive, resilient and sustainable company. .” and CEO Dave Calhoun.

He added: “As we adapt and rebuild for the other end of the pandemic, our diverse product portfolio, including our government services, defense and space programs, continues to provide us with stability.”

File-In a file photo on December 16, 2019, a worker looks up under a Boeing 737 MAX jet in Renton, Washington. Boeing discovered a new software issue on its grounded 737 Max jet. The aircraft manufacturer stated that on Friday, January 17, 2020, it will make the necessary changes and cooperate with the Federal Aviation Administration.  (AP Photo/Elaine Thompson, File)
File-In a file photo on December 16, 2019, a worker looks up under a Boeing 737 MAX jet in Renton, Washington, and Boeing finds a new one on its grounded 737 Max jet Software problem. The aircraft manufacturer stated that on Friday, January 17, 2020, it will make the necessary changes and cooperate with the Federal Aviation Administration (Federal Aviation Administration). (AP Photo/Elaine Thompson, File)

The company’s efforts are also in line with the escalating economic crisis triggered by the COVID-19 pandemic, which has severely damaged the company’s commercial aircraft deliveries during the ongoing epidemic. Last week, Southwest Airlines (LUV) ordered new aircraft through Boeing rival Airbus, while American Airlines (AAL) delayed the delivery of 18 MAX aircraft originally scheduled for delivery in the next two years.

Delta Air Lines (DAL) CEO Ed Bastian stated at Yahoo Finance’s All Markets Summit on Monday that the airline industry “never has seen the closest thing to the challenge of managing through a pandemic. .”

Although demand is slowly picking up, Bastian added: “There is no doubt that the recovery is very volatile, and the full recovery of the industry may take several years.

So far, Boeing has used loan facilities, cut costs and expenses, and suspended its coveted dividend. As a result of uncertainty, Boeing’s total debt burden has been soaring since last year, while the company delivered much fewer commercial aircraft in the third quarter than in 2019.

Commercial airlines are free from restrictions that restrict consumers at home and away from home, which means that as passenger traffic declines, they have virtually no opportunity to use new aircraft.

Boeing’s troubles have had a knock-on effect on the entire US economy. The US economy faces several months of uncertainty, and its recovery from the suspension of business in the spring is uneven. The cancellation of new civilian aircraft and lack of orders will affect economic growth and employment data, which are usually shown in high-frequency data.

However, despite Boeing’s efforts to cancel orders, durable goods orders in September increased by 1.9%, better than expected, but there was an unexpected recovery in the commercial aircraft sector.

Javier David is the editor of Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

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