Coro­n­avirus adds to Boe­ing’s list of prob­lems

Houston Chronicle - - BUSINESS - By David Koenig

Boe­ing sold no new air­line jets in Jan­uary, and now the com­pany is wor­ried the virus out­break in China could hurt air­plane de­liv­er­ies in the first quar­ter.

Chief Fi­nan­cial Of­fi­cer Greg Smith said Wed­nes­day that the com­pany is “spend­ing a lot of time” with Chi­nese air­line cus­tomers, try­ing to help them nav­i­gate a down­turn in travel.

Many na­tions have im­posed re­stric­tions on travel to and from China, and air­lines in­clud­ing Amer­i­can, United and Delta have sus­pended flights there be­cause of the out­break.

Smith said that with the vir­us­caused de­cline in air travel, “I can cer­tainly see that im­pact­ing … some near-term first-quar­ter de­liv­er­ies for a lot of us.”

The ex­ec­u­tive spoke at a con­fer­ence run by fi­nan­cial-ser­vices firm Cowen.

Ihssane Mounir, vice pres­i­dent of Boe­ing’s com­mer­cial sales and mar­ket­ing, told re­porters at the Sin­ga­pore air show that the com­pany’s sup­ply chain has not yet been af­fected by the out­break.

“The im­me­di­ate im­pact is more a lo­gis­tics im­pact,” he said. “We do have a num­ber of de­liv­er­ies ready for Chi­nese cus­tomers that they can­not come to Seat­tle to take de­liv­ery.“

Boe­ing re­ported that it re­ceived no new or­ders for com­mer­cial air­craft in Jan­uary, more ev­i­dence of the fi­nan­cial dam­age caused by two deadly crashes and the ground­ing of its 737 Max. It de­liv­ered 13 planes in Jan­uary, in­clud­ing eight larger 787 and 777 mod­els.

Euro­pean ri­val Air­bus re­ported 274 net new or­ders, in­clud­ing a Spirit Air­lines com­mit­ment for 100 jets that com­pete with the Max. Air­bus de­liv­ered 31 planes in Jan­uary.

At the Sin­ga­pore air show this week, Boe­ing said sales of cargo freighters are likely to shrink over the next 14 months.

Boe­ing needs to boost or­ders and de­liv­er­ies to flip its cash-burn prob­lem and start gen­er­at­ing money again.

The Chicago-based com­pany has ar­ranged more than $12 bil­lion in new bor­row­ing from banks to help cover com­pen­sa­tion to air­lines whose Max jets are grounded and ex­penses re­lated to tem­po­rar­ily shut­ting down the Max assem­bly line near Seat­tle.

Boe­ing doesn’t ex­pect the Fed­eral Avi­a­tion Ad­min­is­tra­tion to ap­prove its changes to the Max be­fore sum­mer, but Smith re­peated the com­pany’s ex­pec­ta­tion that it will start a grad­ual re­sump­tion of Max pro­duc­tion once it is con­fi­dent that FAA ap­proval is close.

Smith said Max pro­duc­tion might not re­turn to Boe­ing’s goal of 57 per month un­til next year.

The Max was grounded world­wide in March 2019 af­ter crashes in In­done­sia and Ethiopia killed 346 peo­ple. The com­pany is test­ing new flight soft­ware and de­vel­op­ing a pi­lot-train­ing pro­gram.

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