BA Boeing Co

By Doug Cameron and Andrew Tangel 

Boeing Co. said it would cut production of commercial jets and shrink its workforce further as the coronavirus pandemic deepens its toll on the global aviation industry.

The U.S. aerospace giant said Wednesday that it lost $2.4 billion in the second quarter, reflecting the impact of the pandemic as well as the prolonged grounding of the 737 MAX aircraft following two fatal crashes. This compared with a loss of $2.9 billion in the same period last year.

The per-share loss of $4.20 compared with $5.03 a year earlier and the $2.57 consensus among analysts polled by FactSet. Revenue fell 25% to $11.8 billion.

Boeing shares rose 2% in pre-market trade, with the drain on its cash balance less than many analysts expected.

The company has restarted limited MAX production but pushed back an increase to 31 planes a month until 2022. Boeing is also trimming monthly output of its 787 Dreamliner to six and its 777 wide-body to just two. The new 777X plane won't arrive until 2022, two years behind schedule.

Boeing has already announced plans to shed 10% of its 160,000 strong workforce, and plans further reductions, according to a person familiar with the plans. It also wants to reduce jetliner production as fast as possible, but is mindful of the impact on its broader supply chain, according to the person. It didn't specify how many more jobs would have to be shed.

"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," Boeing Chief Executive David Calhoun said in a message to Boeing employees.

Global airline traffic is forecast to fall more than 60% this year because of travel restrictions and weakening economic growth, and take until 2024 to recover to its 2019 level after a decade of rapid growth, according to the International Air Transport Association, a trade group.

Airlines and leasing companies have responded by canceling and deferring aircraft orders, forcing Boeing and rival Airbus SE to reduce production, prompting suppliers to follow suit and cut thousands of jobs.

The slump in deliveries to just 20 jets in the latest quarter worsens Boeing's cash drain. The company burned through $5.6 billion in cash during the June quarter. Boeing raised $25 billion in debt during the quarter, and had $61.4 billion in debt at the end of June.

The second quarter reflects the mounting turmoil on commercial aviation from the coronavirus pandemic. As infections in its workforce mounted in the spring and suppliers faced their own constraints, the company halted various production operations, including its factories in Everett, Wash., and North Charleston, S.C.

In April, Boeing announced it would ramp up MAX production to 31 jets a month next year, almost half the level before that aircraft's grounding in March 2019.

Back then, it was planning to scale back 787 Dreamliner production to 10 from 14 a month this year, and then to seven a month by next year. Boeing also planned to trim production of wide-body 777s to three a month from five.

Write to Doug Cameron at doug.cameron@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

July 29, 2020 08:30 ET (12:30 GMT)

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