Category Archives: Boeing

Boeing reports its second quarter results

Boeing issued this second quarter financial report:

  • Continued progress on global safe return to service of 737 MAX
  • Revenue of $17.0 billion, GAAP earnings per share of $1.00 and core (non-GAAP)* earnings per share of $0.40
  • Operating cash flow of ($0.5) billion; cash and marketable securities of $21.3 billion
  • Commercial Airplanes backlog grew to $285 billion and added 180 net orders

 

Table 1. Summary Financial Results

Second Quarter

First Half

(Dollars in Millions, except per share data)

2021

2020

Change

2021

2020

Change

Revenues

$16,998

$11,807

44%

$32,215

$28,715

12%

GAAP

Earnings/(Loss) From Operations

$1,023

($2,964)

NM

$940

($4,317)

NM

Operating Margin

6.0%

(25.1)%

NM

2.9%

(15.0)%

NM

Net Earnings/(Loss)

$567

($2,395)

NM

$6

($3,036)

NM

Earnings/(Loss) Per Share

$1.00

($4.20)

NM

$0.09

($5.31)

NM

Operating Cash Flow

($483)

($5,280)

NM

($3,870)

($9,582)

NM

Non-GAAP*

Core Operating Earnings/(Loss)

$755

($3,319)

NM

$402

($5,019)

NM

Core Operating Margin

4.4%

(28.1)%

NM

1.2%

(17.5)%

NM

Core Earnings/(Loss) Per Share

$0.40

($4.79)

NM

($1.12)

($6.49)

NM

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”  

The Boeing Company reported second-quarter revenue of $17.0 billion, driven by higher commercial airplanes and services volume. GAAP earnings per share of $1.00 and core earnings per share (non-GAAP)* of $0.40 primarily reflects higher commercial volume and lower period costs (Table 1). Boeing recorded operating cash flow of ($0.5) billion.

“We continued to make important progress in the second quarter as we focus on driving stability across our operations and transforming our business for the future,” said Boeing President and Chief Executive Officer David Calhoun. “While our commercial market environment is improving, we’re closely monitoring COVID-19 case rates, vaccine distribution and global trade as key indicators for our industry’s stability. As we continue to position for a robust recovery, we remain committed to safety and quality, while investing in our people, products and technology. I am proud of our team’s resilience and commitment as we work to rebuild trust, improve our performance and deliver for our commercial, defense, space and services customers.”

As part of Boeing’s ongoing focus on global sustainability, the company published its first integrated Sustainability Report in July. “This was an important step in our continued efforts to reinforce our Environmental, Social, and Governance principles,” Calhoun said.

Table 2. Cash Flow

Second Quarter

First Half

(Millions)

2021

2020

2021

2020

Operating Cash Flow

($483)

($5,280)

($3,870)

($9,582)

Less Additions to Property, Plant & Equipment

($222)

($348)

($513)

($776)

Free Cash Flow*

($705)

($5,628)

($4,383)

($10,358)

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”    

Operating cash flow improved to ($0.5) billion in the quarter, driven by higher commercial deliveries, higher order receipts, and lower expenditures (Table 2).

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q2 21

Q1 21

Cash

$8.2

$7.0

Marketable Securities1

$13.1

$14.9

Total

$21.3

$21.9

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$62.1

$62.0

Boeing Capital, including intercompany loans

$1.5

$1.6

Total Consolidated Debt

$63.6

$63.6

1 Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”

Cash and investments in marketable securities decreased to $21.3 billion, compared to $21.9 billion at the beginning of the quarter, primarily driven by operating cash outflows (Table 3). The company has access to credit facilities of $14.8 billion which remain undrawn.

Total company backlog at quarter-end was $363 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

Second Quarter

First Half

(Dollars in Millions)

2021

2020

Change

2021

2020

Change

Commercial Airplanes Deliveries

79

20

295%

156

70

123%

Revenues

$6,015

$1,633

268%

$10,284

$7,838

31%

Loss from Operations

($472)

($2,762)

NM

($1,328)

($4,830)

NM

Operating Margin

(7.8)%

(169.1)%

NM

(12.9)%

(61.6)%

NM

Commercial Airplanes second-quarter revenue increased to $6.0 billion primarily driven by higher commercial airplane deliveries. Second-quarter operating margin improved to (7.8) percent, primarily due to lower period costs as well as higher delivery volume (Table 4).

Boeing is continuing to make progress on the global safe return to service of the 737 MAX. Since the FAA’s approval to return the 737 MAX to operations in November 2020, Boeing has delivered more than 130 737 MAX aircraft and airlines have returned more than 190 previously grounded airplanes to service. 30 airlines are now operating the 737 MAX, safely flying nearly 95,000 revenue flights totaling more than 218,000 flight hours (as of July 25, 2021). The 737 program is currently producing at a rate of approximately 16 per month and continues to expect to gradually increase production to 31 per month in early 2022 with further gradual increases to correspond with market demand. The company will continue to assess the production rate plan as it monitors the market environment and engages in customer discussions.

As Boeing has previously shared, the company is conducting inspections and rework and continues to engage in detailed discussions with the FAA on verification methodology for 787. In connection with these efforts, the company announced earlier this month that it has identified additional rework that will be required on undelivered 787s. Based on our assessment of the time required to complete this work, Boeing is reprioritizing production resources for a few weeks to support the inspection and rework. As that work is performed, the 787 production rate will temporarily be lower than five per month and will gradually return to that rate. Boeing expects to deliver fewer than half of the 787s currently in inventory this year.

Commercial Airplanes secured orders for 200 737 aircraft for United Airlines, 34 737 aircraft for Southwest Airlines, and a total of 31 freighter aircraft. Commercial Airplanes delivered 79 airplanes during the quarter and backlog included over 4,100 airplanes valued at $285 billion.

Defense, Space & Security

Table 5. Defense, Space & Security

Second Quarter

First Half

(Dollars in Millions)

2021

2020

Change

2021

2020

Change

Revenues

$6,876

$6,588

4%

$14,061

$12,630

11%

Earnings from Operations

$958

$600

60%

$1,363

$409

233%

Operating Margin

13.9%

9.1%

53%

9.7%

3.2%

203%

Defense, Space & Security second-quarter revenue increased to $6.9 billion driven by higher KC-46A Tanker and P-8A Poseidon volume. Second-quarter operating margin increased to 13.9 percent, primarily reflecting the absence of a charge on the KC-46A Tanker program as compared to second quarter 2020, as well as a favorable non-US contract adjustment.

During the quarter, Defense, Space & Security secured an award for 14 H-47 extended-range Chinook helicopters for the U.K. Royal Air Force and signed an agreement with the German Ministry of Defense for five P-8A Poseidon aircraft. Defense, Space & Security conducted the first MQ-25 unmanned aerial refueling of a F/A-18 Super Hornet and successfully joined T-7A Red Hawk front and aft sections in under 30 minutes enabled by digital design. Also, the first Core Stage for NASA’s Space Launch System began stacking with other Artemis I elements.

Backlog at Defense, Space & Security was $59 billion, of which 32 percent represents orders from customers outside the U.S.

Global Services

Table 6. Global Services

Second Quarter

First Half

(Dollars in Millions)

2021

2020

Change

2021

2020

Change

Revenues

$4,067

$3,488

17%

$7,816

$8,116

(4)%

Earnings/(Loss) from Operations

$531

($672)

NM

$972

$36

NM

Operating Margin

13.1%

(19.3)%

NM

12.4%

0.4%

NM

Global Services second-quarter revenue increased to $4.1 billion and second-quarter operating margin increased to 13.1 percent primarily driven by higher commercial services volume. Operating margin was also favorably impacted by lower asset impairments, lower severance costs, and mix of products and services.

During the quarter, Global Services signed an expanded parts agreement with Turkish Technic and announced a partnership to expand capacity for 737-800 Boeing Converted Freighters. Global Services was also selected to provide P-8A training and sustainment as well as C-17 training to the U.K. Royal Air Force, and was awarded a modification for KC-46A interim contract support for the U.S. Air Force.

Additional Financial Information

Table 7. Additional Financial Information

Second Quarter

First Half

(Dollars in Millions)

2021

2020

2021

2020

Revenues

Boeing Capital

$78

$69

$138

$134

Unallocated items, eliminations and other

($38)

$29

($84)

($3)

Earnings/(Loss) from Operations

Boeing Capital

$36

($7)

$57

$17

FAS/CAS service cost adjustment

$268

$355

$538

$702

Other unallocated items and eliminations

($298)

($478)

($662)

($651)

Other income, net

$199

$94

$389

$206

Interest and debt expense

($673)

($553)

($1,352)

($815)

Effective tax rate

(3.3)%

30.0%

126.1%

38.4%

At quarter-end, Boeing Capital’s net portfolio balance was $1.9 billion. The change in revenue from other unallocated items and eliminations was primarily due to the timing of allocations. The loss from other unallocated items and eliminations was impacted by lower deferred compensation expense as compared to the second quarter of 2020. Interest and debt expense increased due to higher debt balances. The second quarter 2021 effective tax rate primarily reflects benefits from a lower valuation allowance.

Top Copyright Photo: Joe G. Walker. The Boeing test fleet at Boeing Field in Seattle.

Boeing completes successful 737-10 first flight

Boeing’s 737-10, the largest airplane in the 737 MAX family, today (June 18, 2021) completed a successful first flight. The airplane took off from Renton Field in Renton, Washington, at 10:07 a.m. and landed at 12:38 p.m. at Boeing Field in Seattle.

“The airplane performed beautifully,” said 737 Chief Pilot Capt. Jennifer Henderson. “The profile we flew allowed us to test the airplane’s systems, flight controls and handling qualities, all of which checked out exactly as we expected.”

MAX-10 First Flight Takeoff Renton

Photo: Boeing.

Today’s flight was the start of a comprehensive test program for the 737-10. Boeing will work closely with regulators to certify the airplane prior to its scheduled entry into service in 2023.

The 737-10 can carry up to 230 passengers. It also incorporates environmental improvements, cutting carbon emissions by 14 percent and reducing noise by 50 percent compared to today’s Next-Generation 737s.

As a leading global aerospace company, Boeing develops, manufactures and services commercial airplanes, defense products and space systems for customers in more than 150 countries. As a top U.S. exporter, the company leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact. Boeing’s diverse team is committed to innovating for the future and living the company’s core values of safety, quality and integrity.

Alaska Airlines to join the Boeing ecoDemonstrator Program with a special 737-9 logo jet

Boeing made this announcement:

Boeing and Alaska Airlines announced today they are partnering on the latest Boeing ecoDemonstrator program and will flight test about 20 technologies on a new 737-9 to enhance the safety and sustainability of air travel.

In flights beginning this summer, Boeing and Alaska will test a new halon-free fire-extinguishing agent that significantly reduces effects on the ozone layer, evaluate an engine nacelle designed to reduce noise and assess cabin sidewalls made from recycled material, among other projects.

Since 2012, the ecoDemonstrator program has accelerated innovation by taking nearly 200 promising technologies out of the lab and testing them in the air to address challenges for the aviation industry and improve the passenger experience.

In five months of ecoDemonstrator flight tests, Boeing and Alaska will work with nine other partners to test new technologies. After tests are complete, the airplane will be configured for passenger service and delivered to Alaska. The program’s technologies include:

  • Testing a new fire extinguishing agent for aircraft that significantly reduces effects on the ozone layer. This material is intended to replace Halon 1301, which is no longer being produced.
  • Collaborating with the U.S. National Oceanic and Atmospheric Administration to measure greenhouse-gas levels in the atmosphere to support the agency’s climate modeling and long-term forecasting.
  • Evaluating acoustic lining concepts within the engine nacelle that may reduce noise on current engines and will inform designs for next-generation models.
  • Recycling carbon composite material from Boeing 777X wing production into a cabin sidewall panel. This durable, light material would reduce fuel use and carbon emissions, and supports Boeing’s goals for sustainable manufacturing.

Boeing’s current and future airplanes leverage a number of technologies evaluated in previous ecoDemonstrator testing, including:

  • Advanced Technology winglets on the 737 MAX family that reduce fuel use and emissions.
  • iPad apps that provide real-time weather and other data to pilots, improving fuel efficiency and reducing CO2 emissions. These apps complement digital analytics services Boeing offers to help airlines optimize fleet utilization.
  • A camera system on the new 777X that will enhance safety by helping pilots avoid obstacles on the ground.

ecoDemonstrator test flights are flown on a blend of petroleum-based and sustainable aviation fuel. SAF is in regular use today, reduces life-cycle CO2 emissions by up to 80%, and offers the most immediate and greatest potential to reduce emissions over the next 20 to 30 years in all commercial aviation markets.

In January this year, Boeing committed to make sure its commercial airplanes are capable and certified to fly on 100% SAF by 2030. The company also plans to work with regulatory authorities and across the industry to raise the current 50% blending limit for expanded use of SAF. Boeing’s 2018 ecoDemonstrator 777 Freighter made history as the world’s first commercial airliner to fly on 100% sustainable fuel.

More from NOAA:

NOAA and Boeing are teaming up to evaluate the best placement for a NOAA greenhouse gas sampling system on a commercial jet by testing options on a new Boeing 737 as part of Boeing’s 2021 ecoDemonstrator flying test bed program. This is a first step toward an expansion of NOAA’s global atmospheric sampling network to include commercial airliners in the U.S. and International airlines in these critical data-gathering efforts.

In the coming weeks, scientists with NOAA’s Global Monitoring Laboratory will oversee installation of three different air sampling inlet configurations on an Alaska Airlines 737-9, one of about 20 different technologies to be included in Boeing’s annual ecoDemonstrator program.

 

Image
NOAA’s Global Greenhouse Gas Reference Network measures gas concentrations air samples from more than 50 ground based sampling locations around the world. NOAA also contracts with a small number of civilian pilots to collect airborne samples. Credit: NOAA Global Monitoring Laboratory

 

During test flights this summer and fall, NOAA scientists will be focused on identifying the best way to sample air outside the commercial airplane to minimize contamination. Air for greenhouse gas measurements will be collected from a duct that feeds outside air into the airplane’s interior, and from two inlets mounted in a window plug for comparison.

Goal: standardizing inlet location

“The ecoDemonstrator program provides NOAA an unparalleled opportunity to test our greenhouse gas sampling system on a civilian airliner,” said Colm Sweeney, lead scientist for the NOAA Global Monitoring Laboratory’s aircraft measurements program. “Standardizing the location and installation of greenhouse gas monitoring instruments on commercial aircraft will be an important first step in expanding our sampling network to provide data for scientists and policymakers interested in understanding greenhouse gas emissions that are driving climate change.”

For the past 10 years, Boeing’s ecoDemonstrator program has taken nearly 200 promising technologies out of the lab and tested them in the air to address challenges for the aviation industry and improve the passenger experience. Each year, the company selects a different aircraft for ecoDemonstrator flight testing by partnering with an airline or using a Boeing-owned aircraft. The NOAA project is one of several technologies being flight-tested this year that are related to environmental sustainability.

 

Image
Hiring private contractors to sample greenhouse gases from the air is an important aspect of NOAA’s climate research. Here, Paolo Wilczak pilots a sampling flight over southeastern Connecticut on April 25, 2020, as part of the East Coast Outflow field mission. The Global Monitoring Laboratory hopes to add civilian airliners to its sampling fleet. Credit: Paolo Wilczak, Scientific Aviation

 

The NOAA Global Greenhouse Gas Reference Network measures the atmospheric distribution and trends of the three main, long-term drivers of climate change – carbon dioxide, methane, and nitrous oxide – along with carbon monoxide, an indicator of air pollution. The network collects samples from four baseline atmospheric observatories, as well as from 50 partner institutions and trained volunteers around the world. Since 1992, NOAA has contracted with a handful of private pilots who have collected air samples at a range of altitudes and locations across North America.

Data collected by aircraft provide a view of how the large-scale horizontal and vertical distribution of the measured gases change throughout a given year over the continent. This allows scientists to estimate the contribution of both natural and manmade emissions from the North America continent to the global atmosphere.

Added measurements would improve climate models

While NOAA’s current network of 14 U.S. land-based sites provide valuable scientific data for estimates made by models and satellites, scientists need to increase the number and location of samples to directly measure changes in natural and human-made emissions, and the effectiveness of policies designed to reduce climate change impacts.

NOAA’s ultimate goal is to install greenhouse gas measurement equipment on in-service aircraft to enhance its existing long-term greenhouse gas dataset, which informs policymakers and climate researchers around the world. U.S. commercial aircraft routinely collect weather observations, particularly vertical profiles of temperature and relative humidity captured on takeoff and landing, which have become increasingly important to improving short-term numerical weather models that forecasters rely on to predict severe weather.

“Greenhouse gas measurements made from U.S. commercial airliners would help scientists verify the effectiveness of mitigation efforts in urban areas near major metropolitan airports, and changes in natural emissions coming from melting permafrost near remote airports in the high Arctic,” said Kathryn McKain, the lead scientist for NOAA’s Commercial Aircraft Sampling Network.

Boeing halts 787 Dreamliner deliveries pending approval of planned inspection method

 

Copyright Photo: Joe G. Walker.

From Reuters:

“The Federal Aviation Administration said Friday that Boeing had temporarily halted deliveries of 787 Dreamliners as the agency waits for more data to determine if the planemaker’s planned inspection method meets federal requirements.

Boeing said earlier it was providing the FAA with more information on its undelivered 787 Dreamliners but that there was no impact on planes already in service.

The FAA noted it had issued two airworthiness directives to address production issues for in-service airplanes.”

SMBC Aviation Capital orders 14 Boeing 737 MAX jets

Boeing and SMBC Aviation Capital today announced the lessor is positioning its portfolio for air traffic recovery by ordering 14 additional 737-8 jets, growing its 737 MAX portfolio. The new order comes as airlines prepare for a robust return to air travel and modernize their narrow body fleets to reduce fuel use and carbon emissions.

The new purchase builds SMBC Aviation Capital’s 737 MAX portfolio to 121 jets, expanding their investment in Boeing’s single-aisle family. SMBC Aviation Capital also continues to incorporate new 737 MAX airplanes into the global fleet. In the first quarter of 2021, the lessor delivered 13 737-8s to customers, including 11 planes to Southwest Airlines in the U.S. and two planes to TUI in Europe.

 

Reuters: Boeing to boost 737 MAX production in late 2022

From Reuters:

“Boeing has drawn up preliminary plans for a fresh sprint in 737 MAX output to as many as 42 jets a month in fall 2022, industry sources said.”

Previously Boeing had provided industry guidance that it expected to have a production rate of 31 aircraft a month by early 2022.

Boeing has not yet confirmed the Reuters report.

Boeing 737-8 MAX 8 Slide Show:

Boeing 737-9 MAX 9 Slide Show:

 

Boeing expands partnership with COOPESA to convert more 737-800s to freighters, FAA approves fix for 737 MAX electrical flaw

Boeing has announced a new partnership with a Costa Rica-based maintenance, repair and overhaul (MRO) provider to create additional conversion capacity for the 737-800 Boeing Converted Freighter.

Boeing will open two 737-800BCF conversion lines with Cooperativa Autogestionaria de Servicios Aeroindustriales (COOPESA) in Alajuela, Costa Rica. The first of the new conversion lines is expected to open in early 2022, with the second anticipated later that year. Boeing forecasts 1,500 freighter conversions will be needed over the next 20 years to meet growing demand. Of those, 1,080 will be standard-body conversions, with nearly 30% of that demand coming from North America and Latin America.

Currently, Boeing converts 737-800 passenger airplanes to freighters at three locations: Boeing Shanghai Aviation Services (BSAS) in Shanghai, China; Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO) in Guangzhou, China; and Taikoo (Shandong) Aircraft Engineering Co. Ltd. (STAECO) in Jinan, China.

To date, the 737-800BCF has won more than 180 orders and commitments from 15 customers on four continents. In March, Boeing re-delivered the 50th 737-800BCF since entering into service in 2018.

In other news, the FAA has approved Boeing’s fix of the 737 MAX electrical problem. This will pave the way for over 100 impacted aircraft to return to service and   be delivered.

 

Reuters: FAA orders Boeing to fix some 737 MAX electric systems

Boeing is facing new issues with its 737 MAX, this time affecting 109 aircraft worldwide, including 71 in the United States. Boeing is now halting all deliveries of the type.

From Reuters:

“The U.S. Federal Aviation Administration (FAA) on Wednesday ordered Boeing Company to fix bonding issues in the electrical systems of some of its 737 MAX planes that could lead to a loss of engine ice protection loss and critical functions on the flight deck.

The FAA said the issue affected 109 airplanes worldwide delivered to airlines, including 71 in the United States and warned the issue if not fixed “could affect the operation of certain systems, including engine ice protection, and result in loss of critical functions and/or multiple simultaneous flight deck effects, which may prevent continued safe flight and landing.”

Read the full article.

 

Boeing recommends operators of some 737 MAX airplanes temporarily remove them from service to address a potential electrical issue

Boeing has issued a recommendation to 16 customers (including American, Southwest and United) to remove and inspect certain Boeing 737 MAX aircraft due to a “potential electrical issue”. This is apparently due to a production issue when the aircraft were built.

The FAA issued this statement:

Boeing recommends operators of some 737 MAX airplanes temporarily remove them from service to address a potential electrical issue. The FAA will ensure the issue is addressed. Passengers should contact airlines about possible flight delays and cancellations.

Boeing issued this statement:

Boeing has recommended to 16 customers that they address a potential electrical issue in a specific group of 737 MAX airplanes prior to further operations. The recommendation is being made to allow for verification that a sufficient ground path exists for a component of the electrical power system.

We are working closely with the U.S. Federal Aviation Administration on this production issue. We are also informing our customers of specific tail numbers affected and we will provide direction on appropriate corrective actions.

American Airlines has grounded 17 MAX aircraft.

American Airlines Boeing 737-8 MAX 8 N378SC (msn 44471) BFI (Joe G. Walker). Image: 952213.

Above Copyright Photo: American Airlines Boeing 737-8 MAX 8 N378SC (msn 44471) BFI (Joe G. Walker). Image: 952213.

Southwest Airlines has removed 30 of its 58 MAX aircraft for inspections.

Southwest Airlines Boeing 737-8 MAX 8 N8701Q (msn 42554) PAE (Nick Dean). Image: 953439.

Above Copyright Photo: Southwest Airlines Boeing 737-8 MAX 8 N8701Q (msn 42554) PAE (Nick Dean). Image: 953439.

United Airlines has grounded 16 of its 30 MAX aircraft according to USA Today.

United Airlines Boeing 737-9 MAX 9 N1780B (N27520) (msn 64499) PAE (Nick Dean). Image: 951068.

Above Copyright Photo: United Airlines Boeing 737-9 MAX 9 N1780B (N27520) (msn 64499) PAE (Nick Dean). Image: 951068.