Boeing has reported $641m in losses in Q1 of 2020 and used $4.3bn in cash as the company tries to stay afloat amid the ongoing Covid-19 coronavirus pandemic.
Across the board, the company’s deliveries of defence and commercial products were down, with the company delivering 39 defence systems in Q1 2020, compared with 60 in the same quarter of 2019.
Despite the drop in defence deliveries, Boeing’s defence business has stayed relatively stable, something Calhoun said would help the company ‘limit the overall depth of the cut’ caused by the fallout from Covid-19.
The results came days after Boeing pulled out of a deal to establish joint ventures with Embraer, which would have seen the two companies work together on commercial products, and explore new markets for the C-390 Millennium medium airlift and air mobility aircraft.
In a letter to staff, Boeing president and CEO Dave Calhoun addressed the poor results. Calhoun said: “The pandemic is also delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability.
“The demand for commercial airline travel has fallen off a cliff, with US passenger volumes down more than 95% compared to last year. Globally, commercial airline revenue is expected to drop by $314bn this year.”
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To free up capital to help see itself through the crisis, Boeing has reduced operating costs and discretionary spending, suspended dividends to shareholders, extended an already-in-place pause on stock buybacks, reduced or deferred research and development spending, and accelerated some payments.
Calhoun added that despite dealing with the ongoing crisis, Boeing was still focused on pushing forward with 2020 priorities to: “support our defence customers with progress across our future franchise programmes, including MQ-25, T-7A Red Hawk, MH-139A Grey Wolf and our Extra-Large Unmanned Undersea Vehicle (XLUUV)” and to continue to grow its government services business.
In Q1 Boeing delivered, 39 defence products, including a mix of two new AH-64 Apaches, 14 remanufactures AH-64 Apaches, nine new CH-47 Chinooks, one renewed CH-47 Chinook, five FA/18 model aircraft, five KC-46 tankers, and three P-8 Poseidon aircraft.
In its Q1 results, Boeing defence revenue decreased to $6bn, in part due to a charge on KC-46A tanker aircraft. During the financial quarter Boeing received orders for 18 P-8A Poseidon maritime patrol aircraft, and a contract with the US Army to further develop its entry to the Future Long-Range Assault Aircraft programme.
Boeing is currently sitting on a Defence, Space and Security order backlog worth $64bn.