Boeing Co. reported a record net loss of $ 11.9 billion in 2020, the result of the combined effects of the stranding of the 787 Max and a global pandemic that has deeply affected the aerospace industry.
Boeing makes its widebody 787 Dreamliner in North Charleston and is the largest private employer in Charleston County.
After a year with several announcements about acquisitions, layoffs and reductions in production rates, Wednesday’s report did not include additional cuts in the workforce or changes in rates beyond what had been previously reported.
In a message to employees on Wednesday, CEO Dave Calhoun described last year as one of “a deep social and global disruption”. The “profound impacts of COVID-19 on commercial air travel” and the stranding Max were reflected in its performance, he wrote.
In the fourth quarter, in particular, problems with the Boeing jet, made in South Carolina, also affected revenues.
A 37% reduction in revenue year over year for the commercial aircraft division during the last quarter was attributed to low deliveries of wide bodies, driven by production defects in the COVID-19 and 787.
The flaws found in the fuselage of the widebody aircraft prompted Boeing to begin inspecting all completed jets. These inspections, which the company expanded later in 2020, as they discovered the problem was more widespread than previously thought, slowed deliveries of the 787 to the point that none of the planes were delivered in the last two months, in November and December . .
Boeing’s South Carolina plant in North Charleston is set to become the only location where the 787 is assembled, after Boeing disrupts the 787’s operations in Everett, Wash., The wide fuselage plant on the west coast that, until now, it shared the work with the Lowcountry Plant.
Because of ongoing inspections, however, workers at Everett will continue to check the problems with the 787s manufactured there and do any necessary rework before delivering them to customers.
In his message to employees on Wednesday, Calhoun reiterated the planners’ position that while inspections caused 787 deliveries to stall, they were the “right thing to do” for customers and an example of “uncompromising commitment to the quality”.
Wednesday’s report reiterated Boeing’s previously announced plan to reduce the production rate of the 787 to five per month – below a historical record of 14 and one less than the rate of six that had been set at the time the consolidation was made official – at the time of the change.
While the 787’s delivery drought reduced fourth quarter revenues, the losses were “partially offset” by Max deliveries, Boeing said.
Since federal regulators recertified the jet to fly at the end of last year, more than 40 of the planes have been delivered and five airlines have returned their Max fleets to service.
A European aviation security agency announced on Wednesday morning that it would allow the 737 Max to resume flights in Europe as well.
Wednesday’s report included a $ 744 million charge related to an agreement with the Justice Department over its criminal investigation into the 737 Max’s two fatal accidents.
Of this total, $ 243.6 million will be paid as a fine to the government and $ 500 million as compensation to the families of the 346 people who die in Max’s accidents.
The company also announced on Wednesday that it would delay the debut of its 777X jet, built in the state of Washington, until the end of 2023. The company charged $ 6.5 billion for the program, which was hampered by falling demand for new aircraft – especially large planes designed for long-haul international flights.
CEO Calhoun predicted that it will take about three years for air travel to recover after the pandemic. International air travel, which also affects the South Carolina-based 787 and which is used for international routes, is taking longer to recover than domestic travel.
Boeing executives present financial results to investors at 10:30 this morning.
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