Boeing reports another loss, says 2021 'inflection point'

NEW YORK: Boeing lost money for the sixth consecutive quarter, but said Wednesday a rebound was within sight with the return of the 737 MAX to service and widespread Covid-19 vaccines.

The aerospace giant, which has been in crisis mode since March 2019 when regulators grounded the MAX for 20 months following two deadly crashes, reported a $537 million loss in the first quarter, in the red once again on weakness in commercial aviation.

"While the global pandemic continues to challenge the overall market environment, we view 2021 as a key inflection point for our industry as vaccine distribution accelerates and we work together across government and industry to help enable a robust recovery," Boeing Chief Executive Dave Calhoun said in a press release.

The aerospace giant, which sealed major contracts with airlines for the 737 MAX in the first three months of the year, pointed to lower deliveries of its larger 787 "Dreamliner" planes as a drag in the quarter.

Boeing resumed deliveries on the 787 in March following a suspension last fall to address production problems. But lower Dreamliner deliveries were a factor in the 10 percent drop in revenues to $15.2 billion compared with the year-ago period.

Calhoun, in an interview with CNBC, said his hopeful outlook was based on pent-up demand in the United States and some other markets.

"Traffic really is ready to bust back," said Calhoun, adding, "it's always slower than everyone would like, but I am very optimistic."

US regulators at the Federal Aviation Administration approved the MAX to resume service in November, and since then Boeing has delivered more than 85 MAX aircraft and 21 airlines have returned the plane to their fleets, the company said.

But earlier this month, Boeing notified 16 airlines of an electrical problem with the jets, leading to more than 100 MAX planes worldwide to be grounded once again.

Calhoun said Boeing is "finalizing the plans and documentation" over a process to return those MAX planes to service. After the FAA approves the process "we expect the work to take a few days per airplane," he said.

The removal of those MAX planes from service has had limited impact on Boeing's airline customers thus far because travel levels are still depressed due to Covid-19.

But the head of Southwest Airlines, a key Boeing customer, last week said the problem needs to be resolved quickly because travel will soon significantly pick up.

The single-aisle MAX has been seen as a potential cash cow for airlines in the recovery because of its suitability to short distances.

An uptick in leisure travel in the United States "should increase usage and demand for the company's 737 aircraft, targeted for that point-to-point leisure market," said Peter McNally, an analyst at Third Bridge Group.

"However, the international recovery remains less certain, and Boeing is still cautious that this long-haul market will be the slowest to recover."

The Boeing chief also said he was hopeful about international travel down the road, but acknowledged worry over the latest Covid-19 surge in India, telling CNBC "this will have a very deep and lasting effect on domestic travel in India."

Calhoun, 64, was named CEO in December 2019 as the company reeled from the scandal over the MAX.

Last week, Boeing announced that it raised the retirement age for Calhoun to 70, keeping him in the corner office potentially through 2028.

In other divisions in the latest quarter, Boeing reported operating earnings of $405 million in its defense, space and security business, but the results were dented by a $318 million hit in one-time expenses connected to VC-25B, otherwise known as Air Force One, the US president's plane.

The costs were "largely due to Covid-19 impacts and performance issues at a key supplier," Boeing said.

Shares of Boeing fell 2.6 percent to $236.06 in midmorning trading.