July 28, 2021, © Leeham News: The Boeing Co. today reported a slim profit for the second quarter and first half of 2021. But Boeing Commercial Airplanes still is in a loss-making position, though considerable progress was made in reversing losses for the past two years.
Boeing did not take a forward loss on the 787 program, as feared in some quarters (but not LNA). Due to halting deliveries because of a production issue, Boeing lowered the production rate below 5/mo, to an unannounced figure, leading some to speculate the company would take a forward loss today.
LNA learned the rate might go as low as 2/mo for some weeks.
Boeing reported revenues rose 44% for the second quarter, from $11.8bn to $17bn. The company reported an operating income of $1bn vs a loss of $3bn the year before and a net profit of $567m vs a loss of $2.4bn. For the first half, revenues were $32.2bn vs $28,7bn, a rise of 12%. The operating income was $940m vs a loss of $4.3bn. Net income was $6m vs a loss of $3bn. Cash used in the quarter was $483m vs $5.3bn used a year ago. For the half, Boeing consumed $3.9bn in cash vs $9.6bn. Boeing ended the quarter with $21.3bn in cash and marketable securities.
The profits are slim, to be sure, but the upward movement is significant. Boeing Commercial Airplanes reported revenues of $6bn for the quarter vs $1.63bn a year ago. For the first half, BCA revenues were $10.3bn vs $7.8bn. The operating loss was $472m in the quarter vs a loss of $2.8bn a year ago. For the half, the operating loss was $1.3bn vs a loss of $4.8bn.
Boeing delivered 130 737 MAXes since the airplane was recertified in November. The production rate is now about 16/mo with a target of 31/mo early next year. It also returned 190 MAXes to service of the approximately 387 that had been grounded by global regulators in March 2019.
CEO David Calhoun, speaking on the financial program CNBC in advance of the earnings call, said, “We are in a transition year. We are nowhere near where we want to be. Our defense business had a very solid quarter.” There also were no charges that investors became accustomed to.
CNBC aviation reporter Phil LeBeau asked Calhoun about the lengthy inspections Boeing is doing on the 787. Production and quality control issues caused Boeing to suspend delivery of the model last October. It was resumed briefly in May before being suspended again.
“This is Boeing being tough on Boeing,” Calhoun said. “We started the inspection process. We have to be perfect. We have to get every quality issue out of the airplane. [This is] nowhere near the safety window. Most of these conditions were pre-existing almost from the start.” There are now about 100 787s in inventory, which must undergo inspections. Boeing said perhaps half will be delivered this year, a reduction from the previous forecast that nearly all would be.
Boeing produced a video about the current issue, which may be seen here.
LNA reported Monday that the Federal Aviation Administration returned certification authority on the 787 to Boeing on June 19. Calhoun said the FAA is working with Boeing cooperatively on the current inspection process.
He also said the US government is well aware that if the US cedes the Chinese market—which in this case, relates to Boeing—“the other guy” (Airbus) will fill it. Calhoun remains confident recertification of the MAX will be coming soon in China. (LNA understands that certification flights may begin in September or October.)
Calhoun believes passenger traffic recovery will return earlier than forecast at the start of the COVID-19 pandemic.
“We have to be ready for recovery in 2023. Domestic travel has already recovered. I believe by the time we get back to the second half of 2022, airlines will be planning for recovery in 2023,” he said.