NEW YORK • The Boeing Co suffered a bigger than expected loss in the latest quarter, the company announced yesterday, and signalled additional job cuts are likely as it contends with a protracted air travel downturn amid the coronavirus pandemic.
The aerospace giant, which previously suspended the dividend for shareholders and announced a 10% staff downsizing, also said it would phase out production of the iconic 747 jumbo jet and ratchet back production plans on other commercial aircraft due to the weak outlook.
Those moves are expected to lead to further job cuts.
“Regretfully, the prolonged impact of Covid-19 causing further reductions in our production rates and lower demand for commercial services means we’ll have to further assess the size of our workforce,” CEO Dave Calhoun said in a message to employees.
“This is difficult news, and I know it adds uncertainty during an already challenging time. We will try to limit the impact on our people as much as possible going forward.”
Calhoun, in an interview with CNBC, said the latest surge in US coronavirus cases made the near-term travel outlook “more difficult” because airlines that had added flights amid a brief uptick in interest are now cutting back.
But there also was “more optimism about a vaccine” for Covid-19 sometime in 2021 that would support an industry recovery, he said.
The company suffered a US$2.4 billion (RM10.08 billion) loss in the quarter ending June 30 as revenues plunged 25% to US$11.8 billion. The hit from coronavirus has prolonged and worsened Boeing’s slump due to the crisis surrounding the 737 MAX, which was grounded globally in March 2019
following two deadly crashes. Boeing said it was making “steady progress” towards getting the MAX re-certified to fly after the USFederal Aviation Administration completed test flights earlier this month. That process, too, was delayed by the pandemic.
The company resumed some activity on the MAX in May after completely halting work for a few months, but yesterday slowed the production plans further.
Boeing said it planned to gradually increase output of the aircraft to 31 a month at the beginning of 2022, a delay from the earlier plan to hit that level in 2021, and a far cry from the 57 a month target for 2020 before the coronavirus disruption.
The Boeing chief also lowered the output plans for the 777 and the 787 and said the company would cease production of the 747 in 2022.
He told CNBC he does not expect to need additional financing following a US$25 billion bond offering earlier this spring that is expected to provide enough cash to get through the downturn. — AFP