Boeing Announces Further Job Cuts as Financial Losses Continue to Mount
Troubled airplane manufacturer Boeing has released its detrimental earnings today, suffering a fourth consecutive quarter of losses amid the grounding of its 737 MAX and the coronavirus pandemic decimating air travel worldwide.
The prolonged grounding of its once-popular 737 MAX jetliner, followed by the pandemic crisis, has created significant financial hardship for the US plane maker. As a result, its fourth quarter debt soared from $19.2 billion to $61 billion, while revenue dropped by 29% to $14.14 billion. The losses amount to a decline of $1.39 per share, which surprisingly, is less than Wall Street’s average forecast of $2.52 per share in losses.
As a result of the adverse financial losses, Boeing CEO Dave Calhoun announced that the company will begin reducing its global workforce of 130,000, following a furlough moratorium that expired in October. An additional 7,000 jobs will be cut following today’s announcement, which by the end of the year will amount to a total of 30,000 Boeing employees being eliminated via either layoffs, buyouts, or attrition. Nonetheless, Boeing still anticipates that deliveries of its 737 MAX will resume before the end of the year, with Calhoun reaffirming the company’s goal to meet its build rate of 31 narrow-bodies per month come 2022.
In the meantime, the Federal Aviation Administration is expected to lift the grounding order that was imposed on all 737 MAX airplanes back in March 2019 as early as November of this year. However, the move is still dependent upon the approval of Boeing’s training changes and software updates. Likewise, the European Union Aviation Safety Agency (EASA) announced that the 737 MAX is now safe to return to European skies before the end of the year.
What was once one of the most popular passenger airplanes, Boeing is now rebranding the 737 MAX as the 737-8. The plane has now been grounded for more than a year following two catastrophic crashes that killed a total of 346 passengers in Ethiopia and Indonesia. It was determined that both the crashes were the result of newly installed, yet faulty, flight control software that caused the plane to suddenly nosedive into the ground following takeoff.
The harrowing crashes lead to widespread condemnations of Boeing’s 737 MAX, bringing attention to the company’s poor quality controls and aircraft flaws. US lawmakers that investigated the airplane manufacturer determined that the company concealed information regarding the troubled 737 MAX from regulators during its approval process. Since last year, Boeing’s stock has fallen by a staggering 57%, and given the worsening outlook of the pandemic’s affect on air travel, the company has a long recovery road ahead.
Information for this briefing was found via Boeing. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
