Boeing reported quarterly results on Wednesday.LINDSEY WASSON/Reuters
Boeing Co. on Wednesday confirmed a halt on 737 Max deliveries after electrical problems re-grounded part of the fleet, and voiced concerns over a surging pandemic in India and U.S.-China political tensions.
Reuters reported on April 16 that Boeing stopped delivering its cash cow single-aisle 737 Max after the electrical grounding problem – months after the plane returned to service following a lengthy safety ban.
Boeing’s shares fell nearly 2.6 per cent after the U.S. plane maker reported its sixth straight quarterly loss and a charge on its high-profile Air Force One presidential jet program.
The barrage of technical and financial challenges clouded optimism over a resurgent U.S. domestic travel market fuelled by vaccinations and pent-up demand.
“We view 2021 as a critical inflection point for our industry,” chief executive Dave Calhoun told analysts on a conference call.
Boeing has paused 737 Max deliveries to address the electrical issues, and expects to “catch up on deliveries over the balance of the year,” Mr. Calhoun added.
But Mr. Calhoun said he could not predict when the 737 Max’s electrical grounding issue would be resolved, and doubled down on fears of a long-off recovery of international travel, citing the pandemic’s impact and tensions between Washington and Beijing.
He also said he expects China to lift its grounding order on the 737 Max in the second half of 2021.
Boeing has delivered more than 85 737 Max jetliners since it was cleared by most regulators to re-enter service late last year following two fatal crashes, lifting revenue and cash flow, it said.
Boeing said it still expects to deliver half the 400 Max jets in inventory by the end of 2021, with a return to positive cash flow in 2022.
But the new electrical grounding problem found on some models of the jet earlier this month has cast a shadow on Boeing’s freshly re-affirmed plans to increase 737 Max production to 31 planes a month by early 2022. Airlines have pulled dozens of 737 Max jets from service, awaiting repairs.
Mr. Calhoun, asked about concerns over Boeing’s falling market share in the narrow-body market against European rival Airbus SE , said: “I want to split that market.”
Highlighting Boeing’s risk in one of the most important battlegrounds for the next generation of jetliners, U.S. major Delta Air Lines placed a firm order for 25 A321neo aircraft last week.
Mr. Calhoun’s remarks came after Boeing extended its required retirement age to 70 from 65 to allow Mr. Calhoun, 64, to stay in the top job.
Mr. Calhoun plans to stay in the role until he is 70, insiders say. His decision surprised many in the industry who saw him as a shorter-term crisis manager and triggered the coming exit of Boeing’s well-regarded chief financial officer and heir apparent for the job, Greg Smith, 54.
Boeing also reaffirmed a sharply reduced production rate of five 787 jetliners a month after consolidating production at its South Carolina factory.
It is facing reduced demand due to the pandemic’s impact on longer-haul travel, and a growing price tag for 787 retrofits due to production defects embedded in dozens of the advanced carbon-composite jetliners.
It still expects to deliver the first 777X mini-jumbo in late 2023 despite certification and design challenges, with a combined output of the new 777X and its 777 legacy model of two a month.
The U.S. plane maker reported a core operating loss of US$353-million in the first quarter, its sixth straight quarterly loss, compared with a loss of US$1.70-billion a year earlier.
Boeing recorded a US$318-million pre-tax charge related to Air Force One presidential aircraft due to a spat with a supplier.
In July, 2018, Boeing received a US$3.9-billion contract to build two 747-8 aircraft for use as Air Force One, due to be delivered by December, 2024.
In the quarter, Boeing completed a hot-fire engine test on NASA’s forthcoming SLS rocket and started production on the U.S. Air Force’s new trainer jet.
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