Boeing on Wednesday reported first-quarter loss of $641 million as crisis continues to mount on the company owing to coronavirus pandemic and the grounding of its troubled 737 Max jet. The company also said that it is planning to reduce its workforce by 10% and cut aircraft production in the near term.
Boeing's profits were already suffering for the past few quarters owing to the grounding of its prized 737 Max and a dearth of orders for aircrafts, which is now further getting affected owing to the coronavirus outbreak that has brought its business to a standstill. This has left the aircraft maker with no choice but to slash part of its workforce.
Another bad quarter for Boeing
Boeing burned though $4.3 billion in cash during the quarter as the company struggled to get a grip over rising cancellations for existing orders and deliveries and dearth of orders for new aircrafts. To add to the worries, the coronavirus outbreak has brought its operations and business to a complete halt.
Following the Covid-19 outbreak, many airless have been cancelling orders or deferring order deliveries. Moreover, the company temporary halted production of its best-selling 737 Max in January as company saw no immediate signs of the aircraft returning to service.
Boeing on Wednesday also said that escalating costs has left the company with no choice but to cut 10% of its workforce through voluntary measures and "involuntary layoffs as necessary". Boeing had around 160,000 employees at the end of 2019. Boeing reported a decline of 26% in revenues to $16.91 billion from a year earlier.
Boeing also to reduce production
Boeing has been going through turbulent times for quite some time now. The company's best-selling aircraft 737 Max remain ground since March 2019 following two fatal crashes in Indonesia and Ethiopia that killed more than 344 people.
The aircraft maker has expected that the flight would return to service sometime in late 2019 but the Federal Aviation Administration, which is still inspecting the aircraft, ruled out chances of an early return of the troubled 737 Max. Boeing is still working on the aircraft's return and has given no specific date.
The company said that with air travel down 95% in United States from a year ago, it will take two to three years for travel demand to recover. Boeing said that it is planning to cut aircraft production, including lowering the output of 737 Dreamliners to 10 a month from 14 aircrafts a year and alter to seven every month by 2022. The aircraft maker had recently drawn down on a $14 billion loan and had sought a loan of $60 billion from the government as aid for itself and its supply chain.