One quarter after Boeing announced it would fire 11,000 workers in hopes to stem its massive cash burn (which in Q3 hit $5 billion), Boeing said that in Q4 2020, the company reported revenue of $15 bn down from $17.9 bn a year earlier.
The loss per share soaring to $15.25 in Q4 up over 7x from the loss of $2.33 a year earlier was largely a result of another massive charge taken by the company due to delays on the 777X program.
The program involves the latest series of the long-range, wide-body, twin-engine Boeing 777 family featuring new GE9X engines, new composite wings with folding wingtips, greater cabin width, and seating capacity, and technologies from the Boeing 787.
Meanwhile, Boeing’s attempts to stem its massive cash burn continue to fail, with the company’s free cash burn in Q4 standing at $4.27 bn, and a record $18.4bn for the full year.
And while everyone knows about the company’s struggles with the 737MAX and COVID-19, the big surprise in Q4 was the delay of the 777X. The first delivery of the behemoth wide-body jet now won’t be made until late 2023. The program took a $6.5 bn pre-tax charge, Boeing said.
Read: Troubles atop UAE skies
This is what Boeing CEO David Calhoun said about the quarter:
“The deep impact of the pandemic on commercial air travel, coupled with the 737 MAX grounding, challenged our results,” Calhoun said. “The impact of COVID-19 presents continued challenges for commercial aerospace into 2021.”
There was one encouraging sign in Boeing’s earnings report, that it has delivered 40 of its 737 Max planes since the U.S. grounding ended last November.
Five airlines have returned the plane to service. Boeing has hundreds of Max jets that are built but undelivered. With the grounding having ended, the company can start shipping them to customers and turning them into cash.
Boeing still has an investment-grade of BBB-/Baa2 rating with a debt load now over $60 bn.
The aircraft, which was grounded after two accidents in which 346 people died, has already been cleared to resume flights in North America and Brazil and is expected to gain approval in Europe soon.
But in a new report, former Boeing manager Ed Pierson claims that further investigation of electrical issues and production quality problems at the 737 factory was badly needed.
Regulators in the US and Europe insist their reviews have been thorough, and that the 737 Max aircraft is now safe.
In his report, Pierson claims that regulators and investigators have largely ignored factors, which he believes, may have played a direct role in the accidents.
He explicitly links them to conditions at the company’s factory in Renton, near Seattle, at the time. Boeing says this is unfounded.
MCAS problems that led to crashes
Lion Air flight JT610 crashed into the sea off Indonesia in October 2018. Five months later, Ethiopian Airlines flight ET302 came down minutes after take-off from the Ethiopian capital Addis Ababa.
Investigators believe both accidents were triggered by the failure of a single sensor. It sent inaccurate data to a piece of flight control software, called MCAS.
This automated system then repeatedly forced the nose of the aircraft downwards, when the pilots were trying to gain height. Ultimately, each aircraft was pushed into an unrecoverable dive.
Pierson’s report draws on material from the official investigations. It claims that both of the crashed aircraft suffered from production defects, almost from the moment they entered service.
These included intermittent flight control system problems and electrical anomalies that occurred in the days and weeks before the accidents.
He claims these may have been signs of flaws in the aircrafts’ highly complex wiring systems, which could have contributed to the erroneous deployment of MCAS.
He also points out that sensor failures contributed to both accidents and asks why such failures were happening on brand new machines.