01—Abstract
Summary
Summary of the 10-Q filed October 28, 2020. Cited figures are marked; the original filing is the authoritative source.
Boeing Company (BA) reported a net loss of $3.5 billiona 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 billionb 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.
02—Key points
Key Highlights
- Net 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.
- Total revenues declined to $42.85 billion from $58.65 billion year-over-year, heavily impacted by reduced commercial aircraft deliveries.
- Commercial 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.
- Total 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.
- Cash used by operating activities was $14.4 billion for the nine months ended September 30, 2020, reflecting ongoing operational challenges and inventory build-up.
- Boeing has accrued a $6.0 billion liability for estimated future 737 MAX customer concessions and other considerations.
- Company expects a multi-year recovery for air travel, projecting a return to 2019 levels in approximately three years.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2020, Boeing Co lost $0.03.
- Revenue$14.14B100.0%
- Cost of revenue−$13.11B92.7%
- Gross profit$1.03B7.3%
- Operating costs−$1.44B10.1%
- Operating income−$401.0M2.8%
- Interest, other & tax−$48.0M0.3%
- Net income−$449.0M3.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed October 28, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $14.14B$19.98B | −29.2% |
| Cost of Revenue | $13.11B$16.93B | −22.6% |
| Gross Profit | $1.03B$3.05B | −66.1% |
| R&D Expenses | $574.00M$778.00M | −26.2% |
| Operating Income | -$401.00M$1.26B | −131.9% |
| Net Income | -$449.00M$1.17B | −138.5% |
| EPS (Basic) | $-0.79$2.07 | −138.2% |
| EPS (Diluted) | $-0.79$2.05 | −138.5% |
| Shares Outstanding (Basic) | 566.10M565.20M | +0.2% |
| Shares Outstanding (Diluted) | 566.10M568.60M | −0.4% |
05—Questions
Frequently Asked Questions
What is Boeing's financial performance for the nine months ended September 30, 2020?
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.
What are the primary drivers of Boeing's financial performance in this period?
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.
How has Boeing managed its liquidity given the challenging environment?
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.
What is the outlook for the Commercial Airplanes segment and future deliveries?
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.
06—Continue