MRO Magazine

Boeing sees 2020 as challenging as any year in recent past

March 13, 2020 | By David Koenig

Boeing is painting a sobering picture for its business in 2020.

The Chicago-based company said Wednesday it has imposed a hiring freeze in response to the virus outbreak that is undercutting air travel and threatening to kill airlines’ appetite for new planes.

It said it received 18 orders last month for new large planes, but 46 orders were cancelled, most of them for the grounded 737 Max, leaving the company with a net loss of 28 orders in February.

Boeing is also restricting employees’ travel and discretionary spending and limiting overtime to work on getting the Max back in flight.


Shares of Boeing Co. were down more than 15% in afternoon trading. They have plunged 55% in just over a year.

“The year ahead is shaping up to be as challenging for our business as any in the recent past,” CEO David Calhoun and Chief Financial Officer Greg Smith said in a note to employees. “On top of the work of safely returning the 737 MAX to service and the financial impact of the pause in MAX production, we’re now facing a global economic disruption generated by the COVID-19 coronavirus.”

The warning about 2020 is a strong statement considering that Boeing is facing its biggest crisis in decades after two deadly crashes involving Max jets and just posted its first full-year loss since 1997.

Indeed, 2020 is off to an ominous start for Boeing. It reported no orders for new commercial planes in January while rival Airbus racked up 274 orders. Boeing’s 18 orders in February were all for so-called widebody or twin-aisles jets – larger planes that are typically used for long flights.

Through Feb. 29 Boeing has reported a loss of 43 orders for the Max, as customers switched those orders to other models. For example, Air Lease Corp., which leases planes to airlines, swapped 9 Max orders MAXs for three larger 787 jets, and Oman Air converted 10 Maxes into four 787s.

The company delivered 30 planes in the first two months of the year compared with 95 a year earlier, before it halted shipments of Max jets. Boeing depends on deliveries to generate cash flow.

Airlines, however, are retrenching to survive a sharp downturn in travel – they are unsure how long it will last.

The three largest U.S. airlines – Delta, American and United – and several international carriers have announced deep cuts to their schedules. The International Air Transport Association, an airline trade group, estimates that the virus could cost airlines up to $113 billion in lost revenue, with the biggest losses in Asia, whose fast-growing airlines were on a buying spree for new jets.



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