BA Boeing Co

By Doug Cameron 

Boeing Co. reported its biggest-ever annual loss and took a big financial hit on its new 777X jetliner designed for long-haul flights, among the businesses hardest hit by the coronavirus pandemic.

The 777X can seat more than 400 passengers and will take over from the 747 jumbo as Boeing's biggest plane when it enters service in late 2023, some three years late. International flying is forecast by airlines to recover toward pre-pandemic levels over the next three to four years.

Government travel restrictions have made it tougher for airlines to fill big planes, and Boeing said the 777X has also been held back by heightened regulatory scrutiny. This follows lapses certifying the 737 MAX before that aircraft was involved in two fatal crashes.

Boeing lost almost $12 billion last year as total jetliner deliveries more than halved, with airlines taking thousands of planes out of service and canceling orders for hundreds more.

Boeing has been plagued by a series of botched jetliner and military programs that more than halved its market value over the past two years. That was even before the pandemic brought a decadelong boom in aircraft sales to a halt, prompting the company to shed 31,000 jobs by the end of 2021.

The $6.5 billion pretax charge on the 777X reflects lower expected profits over the life of the wide-body plane. Chief Executive David Calhoun said in an internal memo that Boeing remains confident of the aircraft's "unmatched capabilities and value it will offer our customers."

Boeing only has around 300 orders for the 777X, most of them from Middle East-based carriers such as Emirates Airline and Qatar Airways that were placed several years ago.

Boeing's shares were recently down 3.1%.

Boeing's fourth-quarter loss of $8.44 billion pushed its annual deficit to $11.94 billion, with sales for the year slipping 24% to $58.2 billion. That dropped Boeing to fourth spot by that measure behind Raytheon Technologies Corp., Lockheed Martin Corp. and Airbus SE.

Chicago-based Boeing didn't provide any detailed financial guidance Wednesday. It expects jetliner sales to increase this year with the resumption of deliveries of its 787 Dreamliner.

The twin-aisle plane, which carries around 230 passengers, has been popular with airlines but quality problems have halted customers taking any new jets since October. The manufacturer also has widened inspections of undelivered Dreamliners to fix production defects before handing over the planes to customers.

The return of the MAX is likely to also boost revenue as customers pay the bulk of the price when they receive a plane. Global regulators had grounded the aircraft for nearly two years after the two fatal crashes took 346 lives, but U.S. aviation regulators approved it for passenger flights again in November after a series of software, hardware and training changes for the jets. European regulators on Wednesday approved the aircraft to resume commercial flights.

Boeing restarted deliveries of the MAX in December from a backlog of 450 finished planes.

The company burned through $18.4 billion in cash last year as aircraft deliveries dropped and has said it doesn't expect to be cash flow positive until next year. It still has orders for more than 4,000 planes, but its backlog of deals shrank by a quarter to $282 billion.

Monthly production of the MAX is still expected to spool up to 31 in early 2022, with output of the 787 dropping to five later this year. Boeing said 787 production remains under review because of the parlous state of international travel demand amid quarantines and other restrictions.

Boeing posted a per-share loss of $14.65 in the latest quarter, far worse than analysts expected because of the 777X charge. It included a previously announced $744 million charge as part of a $2.5 billion settlement with the Justice Department related to the MAX that included a fine and compensation for crash victims' families and customers.

The company also took another $275 million charge for the KC-46A military tanker. Boeing said the aircraft, long beset by delays and cost overruns, has faced production disruptions due to Covid-19 infections and quarantines among workers. Its military order book shrank to $61 billion, in contrast to gains by most rivals just as the Pentagon budget is expected to decline following several years of higher spending.

Andrew Tangel contributed to this article.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

January 27, 2021 11:12 ET (16:12 GMT)

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