Boeing suffers historic $11.9 billion 2020 loss
Pandemic, 737 Max combine for largest setback in its history.
Airline hammered both by the grounding of the 737 Max and the global pandemic that kept its customers out of the air.
Hit both by the grounding of the 737 Max and the global pandemic that paralyzed its airline customers, Boeing suffered a massive net loss last year of $11.9 billion, the largest in its history.
In a message to employees Wednesday, chief executive Dave Calhoun called 2020 “a year of profound societal and global disruption, which significantly impacted our industry.”
The loss was amplified by a $6.5 billion write-off on the 777X program.
And the company reported $1.8 billion in additional accounting charges, including write-offs for the 737 Max, the KC-46 Air Force tanker and the recent settlement of fraud charges with the Department of Justice, financial filings released Wednesday show.
A big setback for 777X
The giant 777X jet flew for the first time almost exactly a year ago and is being flight tested. Its entry into service is delayed two years into 2023, and its market has evaporated for the immediate future as the global pandemic left long-haul international passenger traffic nearly gone.
The large international carriers that ordered it are all in trouble and no longer want to take delivery for some years.
In addition, the botched certification of the 737 Max ensures that regulators worldwide will take a prolonged and painstaking look at the 777X before they approve it to fly.
Boeing’s financial filing Wednesday notes that an updated assessment that the 777X will take longer to certify is “based on ongoing communication with civil aviation authorities” around the world.
Still, while some analysts had anticipated a possible write-off on the 787 Dreamliner program as it struggles with quality defects in production — the fourth quarter showed no such charge — the huge write-off on 777X came as a surprise to the market.
Calhoun told employees the 777X charge reflects “an updated assessment of global certification requirements, our latest assessment of COVID-19 impacts on market demand, and discussions with customers with respect to aircraft delivery timing.”
Boeing also took a $744 million charge on the deferred prosecution agreement reached with the Department of Justice to allow it to escape a conviction on criminal fraud during certification of the 737 Max. This settlement consisted of a $244 million penalty for the criminal conduct plus $500 million as additional compensation to the families of the 346 people who died in two Max crashes.