Boeing’s third-quarter earnings report was accompanied by a warning about more job cuts as fallout from the 737 MAX aircraft problems continues. The airplane maker and defense contractor reported lower-than-expected losses and higher-than-expected revenue during the quarter but the problems with its flagship airplane and the COVID-19 pandemic are proving to be too much.
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Boeing's earnings results
Boeing reported adjusted losses of $1.39 per share, compared to the $2.38 per share in losses analysts were expecting. GAAP losses amounted to 79 cents per share, which was also better than the $1.59 per share in GAAP losses analysts had been expecting. Revenue came in ahead of consensus at $14.1 billion, compared to the $13.84 billion Wall Street had been looking for. Boeing reported operating cash flow of -$4.82 billion.
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In last year's third quarter, the company reported $1.2 billion in profits. Revenue declined 29% year over year, driven by commercial aircraft, where sales plunged 56% from $8.2 billion last year to $3.6 billion in the third quarter of this year.
The company had about 160,000 employees at the beginning of this year. Boeing was already planning to cut 19,000 jobs due to the pandemic and ongoing issues with the 737 MAX aircraft. Now CEO Dave Calhoun says they want to slash their employee count to 130,000 by the end of next year.
Boeing is adding a few jobs in its defense division, which is more stable than its commercial aircraft unit. The company's airline customers don't expect air travel to recover for years, so they've been canceling airplane orders and looking for other ways to save cash. During the first nine months of the year, Boeing lost 381 net new airplane orders. The company's estimates suggest the pandemic could reduce demand in the industry for the next 10 years.
Boeing also said it is still making "steady progress" on getting the 737 MAX airplanes back in the air, but the job cuts may also be related to the issues with the aircraft as well as the pandemic. Both the grounded plane and the pandemic "significantly impacted" the company's bottom line, it said.