Boeing : Reports Record Annual Loss -- 2nd Update

By Doug Cameron and Andrew Tangel

Boeing Co. reported its largest-ever annual loss and took a big financial hit on its newest jetliner, signs that the Covid-19 pandemic is compounding the aerospace giant's problems.

The plane maker said the new 777X, its largest passenger jet, would be at least three years late for airline customers, the latest Boeing plane to hit trouble following the grounding of the 737 MAX after two fatal accidents. Quality problems with its popular 787 Dreamliner jet have halted deliveries since October.

The delay leaves Boeing even more reliant on its defense business and other troubled commercial-aircraft programs to reverse heavy losses, as the pandemic has sapped demand for new planes. Executives said Wednesday they didn't expect Boeing would stop bleeding cash until next year.

"2020 was a year like no other," Chief Executive David Calhoun said on an investor call. "Our world, our industry, our business and our communities were facing unprecedented challenges -- and we're still in the midst of it."

Mr. Calhoun, who took over as CEO a year ago, began his tenure facing the MAX crisis, then the largest in Boeing's history. As the company struggled to restore public confidence, the pandemic quickly became another all-consuming crisis that has forced Mr. Calhoun to slash production and cut tens of thousands of jobs.

Now he is managing a smaller company trying to overcome its past missteps while also keeping up with fierce competition with its European rival Airbus SE. Boeing last year scrapped plans for an all-new jet, and Mr. Calhoun on Wednesday said the company was in no rush to launch a fresh aircraft.

The 777X seats up to about 400 passengers and has folding wings to fit into airport stands. With production of the 747 jumbo ending next year, the 777X will become Boeing's biggest plane when it enters service as soon as late 2023. Airlines don't expect international flying to recover toward pre-pandemic levels for three to four years, and are using smaller planes such as the 787 and the Airbus SE A350.

Government travel restrictions have made it tougher for airlines to fill big planes. Boeing has just 309 orders for the 777X, most from Middle East carriers such as Emirates Airline that bought them at the height of the industry's boom several years ago. No U.S. airlines have ordered the plane.

Boeing said the 777X has also been held back by heightened regulatory scrutiny. This follows lapses certifying the 737 MAX.

The company lost almost $12 billion last year as total jetliner deliveries more than halved, with airlines taking thousands of planes out of service and canceling orders for hundreds more.

Boeing has been plagued by a series of botched jetliner and military programs that more than halved its market value over the past two years. That was even before the pandemic halted a decadelong boom in aircraft sales, prompting the company's plans to shed 31,000 jobs by the end of 2021.

The $6.5 billion pretax charge on the 777X reflects lower expected profits over the life of the wide-body plane.

The plane maker's shares were down nearly 3% in midday trading on Wednesday.

Boeing's fourth-quarter loss of $8.44 billion pushed its annual deficit to $11.94 billion. Revenue for the year slipped 24% to $58.2 billion, leaving the industry bellwether as the fourth-largest aerospace and defense company world-wide by sales after Raytheon Technologies Corp., Lockheed Martin Corp. and Airbus.

Chicago-based Boeing expects jetliner revenue to increase this year as airlines take more 737 MAX jets, with 787 deliveries resuming by March from a backlog of about 80 that underwent inspections.

The return of the MAX is likely to also boost revenue, as customers pay the bulk of the price when they receive a plane. Global regulators had grounded the aircraft for nearly two years after the two crashes killed 346 people, but U.S. aviation regulators approved it for passenger flights again in November after a series of software, hardware and training changes for the jets.

European regulators on Wednesday approved the aircraft to resume commercial flights, and Boeing expects it to be cleared to fly in all markets by midyear. Officials in Europe, however, have pledged greater independence from the U.S. in certifying the safety of the 777X and future Boeing models.

Boeing restarted MAX deliveries in December from a backlog of 450 finished planes.

The company burned through $18.4 billion in cash last year as aircraft deliveries dropped. Boeing has said it doesn't expect to be cash-flow positive until next year. It still has orders for more than 4,000 planes, but its backlog of deals shrank by a quarter to $282 billion.

Monthly production of the MAX is still expected to spool up to 31 in early 2022, with output of the 787 dropping to five later this year. Boeing said 787 production remains under review because of the parlous state of international travel demand amid quarantines and other restrictions.

Boeing reported a per-share loss of $14.65 in the latest quarter, far worse than analysts expected because of the 777X charge. It included a previously announced $744 million charge as part of a $2.5 billion settlement with the Justice Department related to the MAX that included a fine and compensation for crash victims' families and customers.

The company also took another $275 million charge for the KC-46A military tanker. Boeing said the aircraft, long beset by delays and cost overruns, has faced production disruptions due to Covid-19 infections and quarantines among workers. Its military order book shrank to $61 billion, in contrast to most rivals' gains, just as the Pentagon budget is expected to decline following several years of higher spending.

Andy Pasztor contributed to this article.

Write to Doug Cameron at [e-mail] and Andrew Tangel at [e-mail]

(END) Dow Jones Newswires

01-27-21 1353ET