Boeing’s revenue plunges by 25 percent as effects of pandemic take hold
Boeing is still seeking regulators’ confidence in the embattled 737 Max jet, which has been grounded for nearly 18 months after a pair of crashes killed 346 people. And the company is undergoing a painful transition toward what executives acknowledge will be significantly smaller demand for commercial jets for years to come as the company’s airline customers fight for their lives amid the coronavirus pandemic.
Boeing executives estimated Wednesday that it will take three years for commercial air travel to return to normal. Analysts say purchases of new jets ― the core market for Boeing’s commercial business ― are likely to remain depressed until the second half of the decade.
“The reality is the pandemic’s impact on the aviation sector continues to be severe,” Boeing chief executive Dave Calhoun wrote in a letter to employees released Wednesday. “This pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend — all of which affects our business and, ultimately, our bottom line. ”
Boeing’s management team has taken aggressive steps to shrink the company accordingly. Over the past several months, the company has been reducing its head count by about 10 percent through layoffs and voluntary buyouts. On Wednesday, Calhoun notified employees that more jobs would be eliminated, although he did not specify how many.
The company will decrease its production rates for 777 and 787 widebody jets, and carry out a slower 737 production ramp-up than previously planned. The company announced it would end production of its 747 widebody jet in 2022, a decision that is likely to cause steep job losses.