Boeing burns through $4.3 billion in cash, seeks to cut 10% of workforce as coronavirus hurts demand

Boeing posted a first-quarter loss of $641 million Wednesday and said it burned through $4.3 billion in cash during the first quarter as the company faces the coronavirus crisis and the 13-month-long grounding of its best-selling plane, the 737 Max.

The company said it is planning to reduce aircraft production, including of the 787 Dreamliner and to cut payroll by about 10% through voluntary measures and “involuntary layoffs as necessary.”

Boeing had about 160,000 employees at the end of last year.

“We’ll have 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,” CEO Dave Calhoun said in a staff memo.

Shares were up more than 4% in premarket trading.

Here’s how the company did in the first quarter:

• EPS: A loss of $1.70
• Revenue: $16.91 billion

Revenue plunged 26% from a year earlier to $16.91 billion and the company posted an adjusted per-share loss of $1.70.

Wall Street expected the aircraft manufacturer to post a per-share loss of $1.61 and revenue of $17.30 billion, according to Refinitiv estimates. 

Boeing is facing a dismal market for new planes as air travel demand plunges as the pandemic and measures to stop it from spreading keep travelers home. In the past few weeks, it had largely outlined its challenges, such as an increase in cancellations of new planes.

With air travel in the U.S. down 95% from a year ago, Calhoun told shareholders on Monday it likely would take two or three years for travel demand to recover to 2019 levels, a sharp turnaround for an industry that just earlier this year was betting on continued growth. 

The grim outlook comes as Boeing is already grappling with the fallout of two crashes of its 737 Max that killed 346 people. The planes are still grounded more than a year after they were ordered out of the skies by federal regulators. Boeing is still working on a fix. Meanwhile, cancellations of orders for the planes have piled up.

The company will hold an analyst call at 10:30 a.m. ET, when executives are expected to detail Boeing’s cost-cutting measures, aircraft production plan and its expectations for raising additional liquidity.

Boeing has recently drawn down on a nearly $14 billion loan and sought $60 billion in government aid for itself and its supply chain, which includes General Electric and Spirit Aerosystems, but Calhoun has balked at the possibility of providing the government an equity stake in return for federal aid. Boeing has recently offered employee buyouts and frozen hiring.

GE also reported first-quarter earnings on Wednesday, saying revenue declined 8%.