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Boeing Reports Annual Loss, Reevaluates Future Prospects

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Boeing Reports Annual Loss, Reevaluates Future Prospects

Boeing Reports Annual Loss, Reevaluates Future Prospects
January 30
05:00 2020

MIAMI — On Wednesday, Boeing reported its first annual loss since 1997, a sign of continued trouble resulting from the 11-month grounding of the Boeing 737 MAX.

The Boeing 737 MAX was grounded last March after two crashes that resulted in 346 deaths collectively. Since then, the aircraft manufacturer has been struggling to regain the trust of regulators and global travelers as the model’s return to service date continues to be pushed back.

The Details


Boeing reported a $2.4 billion cash outflow in 2019 as opposed to the $15.3 billion net cash inflow reported in 2018. Annual revenue declined from $101.1 billion in 2018 to just $76.6 billion in 2019. Core earnings per share also dropped from $16.01 in 2018 to -$3.47 in 2019.

The annual report cited that the MAX grounding has cost Boeing over $19 billion since last March, with costs of roughly $4 billion from this year alone.

Previous projections estimated that the grounding would only cost the company $8 billion.

Future of Flight/Everett Factory doors K63553-05

To make matters worse for the original equipment manager (OEM), Boeing has announced that it plans to curtail production of its 787 Dreamliner model as interest in the long-range airliner has dwindled.

The manufacturer plans to decrease monthly production from 14 aircraft to 12 aircraft by the end of 2020. Boeing also plans to decrease the monthly output to 10 aircraft by early 2021.

Earlier this month, Airways contributor Jamie Clarke analyzed the confirmed deliveries of Boeing aircraft for 2019, which reported that the manufacturer only delivered 380 aircraft, of which 158 were the 787 Dreamliner model.

The total number of 2019 deliveries stood in stark contrast to the 806 deliveries made in 2018. These figures demonstrate the struggle Boeing faces in the absence of its most popular model.

The financial woes have also forced the corporation to reevaluate its other planned endeavors, including the highly anticipated New Midsize Airplane (NMA).

Nevertheless, there seems to be no defined end to the dilemma as the expected return of the 737 MAX has been pushed back from April to sometime in June.

No Real Timeline By Boeing


Even after receiving approval from the Federal Aviation Administration (FAA), training and operations will likely take at least another 30 days, further prolonging the MAX’s grounding.

After the company announced that it would be suspending 737 MAX production this month, Boeing is already evaluating the repercussions that may arise from pausing and then restarting its production lines in Renton, Washington.

Although the FAA has emphasized that an earlier approval is possible, past projections have pushed many to remain skeptical of a sooner return. Southwest Airlines, which operates the largest fleet of 737 MAXs in the United States, has removed the model from its flight schedule through June 6th.

While the company’s share value has depreciated by over a quarter since the grounding commenced, Boeing stock opened Wednesday trading up three percent. Such fluctuations in price prove that most shareholders are relieved that the reported earnings were not worse.

Only a week into his tenure as chief executive officer (CEO), David Calhoun seems poised to tackle the continued challenges his company faces. After emails were released detailing how Boeing employees planned to intimidate and influence federal regulators, Calhoun described how he plans to shift the corporation’s culture to become more transparent.

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About Author

Andre Madrid

Andre Madrid

A sophomore Finance student at the University of Miami, and an aviation enthusiast since my early youth. When I'm not staring up at the sky, I enjoy watching war documentaries and reading about current events.

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