Investing.com - Boeing (NYSE:BA) reported a wider loss and a steeper drop in revenue than expected on Wednesday, earnings but the company's stock still rose in premarket trade after the airplane-maker reassured about the state of its balance sheet and said it would further scale back production of the 787 Dreamliner.
The net loss per share of $1.70 was some 20% wider than expected, while revenue fell to $16.91 billion from $22.92 billion, worse than the $17.28 billion forecast by analysts. Analysts expect a further drop in revenue but a narrower loss. in the second quarter.
“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” Boeing President and CEO David Calhoun said in a statement.
However, the company added that it expects to have enough liquidity to continue funding its operations, after taking a string of cash conservation measures in recent weeks. These include the drawing of a multi-billion credit facility, cuts to operating and capital spending; the suspension of buybacks and dividends, and the elimination of CEO and Chairman pay for the year.
The pandemic hit Boeing's airline customers at a time when the grounding of its 737 MAX by regulators had already effectively stopped one of its most profitable income streams. The Wall Street Journal reported late on Tuesday that the company may face criminal charges as a result of repeated quality-control lapses with the program, something that threatens to raise its legal liabilities still further.
"As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance."
Against that background, Boeing said it will further reduce production of 787 Dreamliner to seven jets a month.
"With airline customers fighting to survive and unable to order or even utilize new aircraft, Boeing has little choice but to drastically cut its workforce and output," Investing.com analyst Haris Anwar said. "Without a doubt, Boeing's standing will be much weaker than previously, leaving the company way more vulnerable than it had been before the pandemic."
While Boeing didn't detail any staff cuts in its release, Reuters reported Calhoun as saying in an email to staff that the company will shed "roughly 10%" of its workforce "through a combination of voluntary layoffs, natural turnover and involuntary layoffs."
Boeing will need to make "even deeper reductions in areas that are most exposed to the condition of our commercial customers — more than 15% across our commercial airplanes and services businesses, as well as our corporate functions," he said.
Boeing shares are down 59% from the beginning of the year and down 66.4% from their 52-week high of $391.00 set on September 25, 2019. They are under-performing the Dow 30 which is down 15.8% year to date.
Boeing shares rose 2.7% in premarket trading as of 7:55 AM ET (1155 GMT).
Boeing follows other major Capital Goods sector earnings this month
Elsewhere on Wednesday, Boeing's biggest rival in civil aerospace, Airbus, warned that the sector was facing its "gravest crisis ever", after reporting negative cash flow of over $8 billion in the quarter. Defense rival Northrop Grumman (NYSE:NOC) also reported weaker-than-expected earnings, sending its stock down 1.9%.
Earlier in the current earnings season, Lockheed Martin had beat expectations on April 21 with first quarter EPS of $6.08 on revenue of $15.65B, compared to forecast for EPS of $5.81 on revenue of $15.08B.
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