Aerospace giant Boeing on Wednesday announced that it has slashed production on all its large planes, delayed the arrival of its newest jet, and confirmed rumors that it is putting to rest its iconic 747 - all steps to conserve cash as it grapples with the effects of a global slowdown in air travel.
With the reduced manufacturing rates for the 787, Boeing is studying whether to consolidate assembly in a single site instead of building the model in Washington state and SC.
The Boeing chief also lowered the output plans for the 777 and the 787 and said the company would cease production of the 747 in 2022.
The company pushed back the expected return of the troubled 737 Max, which has been grounded since March 2019 after two crashes that killed 346 people. Boeing stock was down about 4 percent in midday trading on Wednesday.
Boeing had previously announced a 10 per cent workforce reduction, or approximately 16,000 jobs.
Although Boeing is downsizing in its commercial aircraft and related segments, the defense side of its business is seeing a boost.
The shares fell three per cent to US$165.68 at 12:45 p.m.in NY, the biggest drop on the Dow Jones Industrial Average.
After June, Boeing said it lost $2.9 billion during the second fiscal quarter of the year, according to its economic report. Analysts had predicted a drain of US$6.57 billion as the company cut costs and slowed work on key aircraft programs to save cash while demand crumbles.
Smith said he saw a path to positive cash flow next year.
So far this year, Boeing deliveries of new airliners are down 71%. But appetites for additional aircraft could rebound sharply, particularly if one of the multiple vaccines under study bring the pandemic under greater control.
The rate adjustment marks the second production cut this year.
Revenues for the troubled aerospace firm went in freefall 25 percent to $11.81bn, down from $15.75bn at the height of the 737 MAX crisis a year ago, despite analysts predicting $13.16bn in profits.
"We would not have been surprised by a $8B+ burn in the quarter given the lower deliveries so clearly a positive", UBS analyst Myles Walton said in a note.
But he said the company would continue to service the 747s already on the market for decades into the future.
Boeing said it was making "steady progress" towards getting the MAX recertified to fly, after the Federal Aviation Administration completed test flights earlier this month. CFO Greg Smith reported that Boeing expects to deliver "the majority" of some 450 grounded Maxes in inventory in the year following certification.
In addition to potentially reducing the workforce at its plant in South Carolina, Boeing said Wednesday it is scaling back production at the North Charleston facility.
Boeing's bill for the Max flying ban was already approaching US$20 billion before the pandemic struck. It announce Wednesday a per-share quarterly loss that was nearly double analysts forecasts and a 25% plunge in sales, which was also much bigger than Wall Street anticipated.