Boeing has reported second quarter 2020 revenues of US$1.6 billion for its commercial aircraft segment, as COVID-19 and the 737 MAX grounding continue to significantly impact the health of the manufacturer.
Commercial Airplanes second-quarter revenue fell by 65% and operating margin decreased reflecting lower delivery volume – 20 airplanes were delivered compared to 90 the same time last year. The backlog included over 4,500 airplanes valued at $326 billion.
The 737 program resumed early stages of production in May and expects to continue to produce at low rates for the remainder of 2020. Production is expected to gradually increase to a rate of 31 per month by the beginning of 2022, with further gradual increases to correspond with market demand. There are currently approximately 450 737 MAX aircraft built and stored in inventory.
According to Greg Smith – EVP, Enterprise Operations and Communications, interim, CFO, “We’ve assumed that the timing of regulatory approvals will enable the 737 MAX deliveries to resume during the fourth quarter of 2020. We have also assumed that the majority of the 737 MAX aircraft in storage will be delivered during the first year after resumption of deliveries.”
In the wide-body segment, Boeing previously planned to reduce the 787 production rate to 10 per month in 2020 and gradually reduce to seven per month by 2022. However, the rate will now be reduced to six per month in 2021. The 777/777X combined production rate will be gradually reduced to two per month in 2021, with 777X first delivery targeted for 2022. At this time, production rate assumptions have not changed on the 767 and 747 programs.
Boeing is adjusting the timing of the first 777-9 deliveries in 2022 versus its prior forecast of 2021, and expects to deliver 777s at an average rate of approximately 2.5 per month in 2020
Due to market uncertainties driven primarily by the impacts of COVID-19 and moving the 777X delivery to 2022, Boeing plans to reduce the combined 777-777X production rate to two per month in 2021 versus the previous plan of three per month in 2021.
Boeing President and Chief Executive Officer Dave Calhoun commented: “We’re working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side.”
“The diversity of our balanced portfolio and our government services, defense and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to adapt for new market realities,” Calhoun added. “We are taking the right action to ensure we’re well positioned for the future by strengthening our culture, improving transparency, rebuilding trust and transforming our business to become a better, more sustainable Boeing. Air travel has always proven to be resilient – and so has Boeing.”