10-QPeriod: Q3 FY2020

BOEING CO Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 28, 2020For Securities:BABA-PA

Summary

Boeing Company (BA) reported a net loss of $3.5 billion for the nine months ended September 30, 2020, a significant decline from the $374 million net earnings in the prior year period. This downturn is primarily attributed to the severe impacts of the COVID-19 pandemic on air travel demand and the ongoing grounding of the 737 MAX aircraft. Total revenues decreased to $42.9 billion from $58.6 billion year-over-year, with the Commercial Airplanes segment being the hardest hit. The company has taken substantial measures to bolster liquidity, including issuing $25 billion in senior notes and drawing on a $13.8 billion term loan facility, leading to a significant increase in total debt to $61.0 billion. Despite these efforts, Boeing faces ongoing challenges related to production rate reductions, inventory build-up, and potential customer concessions. The company anticipates a multi-year recovery for commercial air travel, with global traffic not expected to return to 2019 levels for approximately three years.

Financial Highlights

52 data points
Beta

Revenue

$14.14B

7.3% Gross Margin

Net Income

-$449.00M

-3.2% Net Margin

EPS (Diluted)

$-0.79

Total Assets

$161.26B

Cash & Equivalents

$10.65B

Free Cash Flow

-$5.08B

Financial Statements
Beta
Revenue$14.14B
Cost of Revenue$13.11B
Gross Profit$1.03B
R&D Expenses$574.00M
Operating Income-$401.00M
Net Income-$449.00M
EPS (Basic)$-0.79
EPS (Diluted)$-0.79
Shares Outstanding (Basic)566.10M
Shares Outstanding (Diluted)566.10M

Key Highlights

  • 1Net loss of $3.5 billion for the first nine months of 2020, a substantial drop from a net profit of $374 million in the same period of 2019.
  • 2Total revenues declined to $42.85 billion from $58.65 billion year-over-year, heavily impacted by reduced commercial aircraft deliveries.
  • 3Commercial Airplanes segment reported a significant operating loss of $6.2 billion for the nine months ended September 30, 2020, compared to a loss of $3.8 billion in the prior year.
  • 4Total debt increased substantially to $61.0 billion as of September 30, 2020, up from $27.3 billion at December 31, 2019, due to new debt issuances and borrowings to support liquidity.
  • 5Cash used by operating activities was $14.4 billion for the nine months ended September 30, 2020, reflecting ongoing operational challenges and inventory build-up.
  • 6Boeing has accrued a $6.0 billion liability for estimated future 737 MAX customer concessions and other considerations.
  • 7Company expects a multi-year recovery for air travel, projecting a return to 2019 levels in approximately three years.

Frequently Asked Questions

Boeing reported a net loss of $3.5 billion for the first nine months of 2020, a significant deterioration from a net profit of $374 million in the same period of 2019. Revenues decreased to $42.85 billion from $58.65 billion year-over-year.

The primary drivers are the severe negative impacts from the COVID-19 pandemic on air travel demand and the prolonged grounding of the 737 MAX aircraft. These factors led to reduced aircraft deliveries, lower revenues, and increased operating losses, particularly in the Commercial Airplanes segment.

Boeing has actively managed its liquidity by issuing $25 billion in senior notes and drawing on a $13.8 billion delayed draw term loan facility. These actions, along with cost-saving measures, have bolstered its cash position, though total debt has increased significantly to $61.0 billion.

The Commercial Airplanes segment is experiencing significant losses due to reduced deliveries and lower program margins, exacerbated by the 737 MAX grounding and COVID-19 impacts. Boeing anticipates a multi-year recovery for air travel and is adjusting production rates accordingly. It expects 737 MAX deliveries to potentially resume in the fourth quarter of 2020, but overall recovery to 2019 travel levels is projected to take approximately three years.