Category Archives: Boeing

Three Boeing Dreamlifters transport PPE to South Carolina for COVID-19 recovery efforts

Boeing on May 11 completed another set of COVID-19 airlift missions, deploying three Dreamlifter aircraft to transport more than 150,000 protective eye goggles and face shields from China to the United States. Boeing worked in partnership with the Medical University of South Carolina (MUSC) to deliver the personal protective equipment (PPE) to frontline health care professionals in the MUSC system.

“Today’s delivery puts essential personal protective equipment in the hands of South Carolina’s frontline health care professionals and helps MUSC further support the community during the COVID-19 pandemic,” said Boeing President and CEO Dave Calhoun. “I am incredibly proud of our Boeing team members throughout the world for their work to help stop the spread of COVID-19 and thankful for our government and industry partners that have joined us in the pandemic response.”

The MUSC Health team will use the PPE as they support the revitalization of the economy and ramp-up COVID-19 community outreach efforts, including diagnostic testing and antibody testing, across South Carolina. MUSC Health, under the guidance of the South Carolina Legislature and in partnership with South Carolina Department of Health and Environmental Control (DHEC), has established mobile screening and collection sites in rural and underserved areas.

The mobile setup allows health care providers to rotate sites, reaching people experiencing barriers to health care access for COVID-19 screening. Rural and underserved communities have experienced disparities in access to COVID-19 screening, testing, prevention and treatment in South Carolina and across the U.S.

The MUSC Health team leading this effort were the first in the U.S. to launch a combined virtual urgent care platform and drive-through specimen collection site. They are now bringing a version of this successful model to the communities that need it most.

“On behalf of our entire MUSC family, I’d like to extend a heartfelt thank you to the Boeing team for helping to make today’s critical PPE shipment possible,” said MUSC President, David J. Cole, M.D., FACS. “These goggles and face shields will allow us to continue to expand our ability to test and monitor for COVID-19 as businesses and communities start to move forward. Increasing access to testing in the areas of greatest need throughout our state is an essential part of this work. We must continue to protect our most vulnerable populations. Boeing and MUSC have a longstanding partnership, and today’s delivery is yet another example of two great South Carolina institutions coming together in support of our local community.”

Similar to previous airlift missions flown by the Dreamlifter – a converted Boeing 747-400 Large Cargo Freighter – the medical cargo was transported in the lower lobe of all three aircraft, while 787 component parts were flown in the main deck cargo hold. Boeing donated the cost of the mission transport, with Atlas Air operating the flights on behalf of Boeing. Boeing has scheduled additional flights, to deliver a total of 400,000 units of PPE to MUSC, in the near future.

Boeing continues to support local communities and the heroic health care professionals working tirelessly to stop the spread of COVID-19. Boeing is coordinating closely with U.S. government officials on how to best assist areas with the greatest need.

Leadership Support

“We are grateful for the role Boeing continues to play in collaborating with our health care professionals to help ensure our frontline workers in the fight against COVID-19 have the equipment they need to stay safe while caring for our people.” – South Carolina Governor Henry McMaster

“I want to thank all those who worked so hard to ensure this shipment of critical PPE is arriving in Charleston today. Protecting our frontline health care workers, who put their lives on the line every single day, is absolutely essential, and this will help MUSC do exactly that.” – Sen. Tim Scott

“Our frontline health care workers have proven themselves to be the heroes of the crisis we are facing, and the folks at MUSC are a great example of that. I am immensely grateful for all the work they have done to care for South Carolinians. We’ve seen Americans rise to meet the immense challenges we are facing time and time again, and companies like Boeing are no exception. Thank you for ensuring that our frontline health care professionals have the necessary resources to fight this virus.” – Rep. Joe Cunningham (SC-01)

“I am grateful to the Boeing Dreamlifters for bringing PPE to MUSC. In this time of incredible uncertainty, I am thankful to see private and public organizations come together to help keep our community healthy and safe. As a native Charlestonian, I know firsthand that MUSC Health works hard to protect our families, especially now from the coronavirus, and they will continue to help our community recover from this pandemic. I appreciate Boeing for supporting such an important cause.” – Rep. Joe Wilson (SC-02)

“It’s incredible to see American companies rise to meet the numerous challenges our nation faces in this battle against COVID-19. I’m particularly proud of Boeing for airlifting personal protective equipment to South Carolina for the MUSC hospital system. MUSC Lancaster and MUSC Chester are two critical health care facilities in South Carolina’s 5th Congressional District and I’m extremely grateful for them, as well as companies like Boeing who are working hard behind the scenes to support our nation’s health care efforts.” – Rep. Ralph Norman (SC-05)

“I’m grateful for the dedicated workers we have in South Carolina – from the manufacturing lines to the front lines – and today’s delivery is another example of how South Carolinians come together. Being able to expand our testing efforts at this level is critical in helping us tackle the COVID-19 pandemic and care for our community. Team work across industries and organizations demonstrates the spirit of our State. Thank you to everyone, especially MUSC and Boeing, who made today’s vital delivery possible.” – South Carolina State Senator Marlon Kimpson (District 42)

“Through the generosity and logistical might of Boeing, our local health care providers are receiving much needed equipment to keep them safe while they care for the most vulnerable in our community. We should all be inspired by the efforts of Boeing and their teammates, because together, all challenges can be met.” – North Charleston Mayor Keith Summey.

Photo: Boeing.

 

Boeing reports a first quarter loss of $1.3 billion, CEO issues a letter to employees

Boeing made this announcement:

The Boeing Company reported first quarter revenue of $16.9 billion, GAAP loss per share of ($1.11) and core loss per share (non-GAAP)* of ($1.70), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($4.3) billion.

“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” said Boeing President and CEO David Calhoun. “Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”

As the pandemic continues to reduce airline passenger traffic, Boeing sees significant impact on the demand for new commercial airplanes and services, with airlines delaying purchases for new jets, slowing delivery schedules and deferring elective maintenance. To align the business for the new market reality, Boeing is taking several actions that include reducing commercial airplane production rates. The company also announced a leadership and organizational restructuring to streamline roles and responsibilities, and plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.

Boeing has also taken action to manage near-term liquidity, as it has drawn on a term loan facility; reduced operating costs and discretionary spending; extended the existing pause on share repurchases and suspended dividends until further notice; reduced or deferred research and development and capital expenditures; and eliminated CEO and Chairman pay for the year. Access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to recovery, and the company is actively exploring all of the available options. Boeing believes it will be able to obtain sufficient liquidity to fund its operations.

“While COVID-19 is adding unprecedented pressure to our business, we remain confident in our long term future,” said Calhoun.  “We continue to support our defense customers in their critical national security missions. We are progressing toward the safe return to service of the 737 MAX, and we are driving safety, quality and operational excellence into all that we do every day. Air travel has always been resilient, our portfolio of products and technology is well positioned, and we are confident we will emerge from the crisis and thrive again as a leader of our industry.”

  • Financial results significantly impacted by COVID-19 and the 737 MAX grounding
  • Revenue of $16.9 billion, GAAP loss per share of ($1.11) and core (non-GAAP)* loss per share of ($1.70)
  • Operating cash flow of ($4.3) billion; cash and marketable securities of $15.5 billion
  • Total backlog of $439 billion, including over 5,000 commercial airplanes

Table 1. Summary Financial Results

First Quarter

(Dollars in Millions, except per share data)

2020

2019

Change

Revenues

$16,908

$22,917

(26)%

GAAP

(Loss)/Earnings From Operations

($1,353)

$2,350

NM

Operating Margin

(8.0)%

10.3%

NM

Net (Loss)/Earnings

(641)

$2,149

NM

(Loss)/Earnings Per Share

($1.11)

$3.75

NM

Operating Cash Flow

($4,302)

$2,788

NM

Non-GAAP*

Core Operating (Loss)/Earnings

($1,700)

$1,986

NM

Core Operating Margin

(10.1)%

8.7%

NM

Core (Loss)/Earnings Per Share

($1.70)

$3.16

NM

Commercial Airplanes first-quarter revenue was $6.2 billion reflecting lower deliveries driven by the 737 MAX grounding as well as impacts of COVID-19 (Table 4). First-quarter operating margin decreased to (33.3) percent due to lower delivery volume, $797 million of abnormal production costs from the temporary suspension of 737 MAX production, a $336 million charge related to 737 Next Generation frame fitting component (pickle fork) repair costs, lower 787 margins primarily due to COVID-19, and $137 million of abnormal production costs from the temporary suspension of Puget Sound operations in response to COVID-19.

COVID-19 has adversely impacted the 737 program due to a slower than previously planned production rate ramp-up driven by commercial airline industry uncertainty. To reflect COVID-19 impacts on the demand environment, 737 MAX aircraft production will resume at low rates in 2020 as timing and conditions of return to service are better understood and gradually increase to 31 per month during 2021, with further gradual increases to correspond with market demand. The estimated abnormal production costs from the temporary suspension of 737 MAX production have increased by approximately $1 billion due to updated production rate assumptions, bringing the estimated total to approximately $5 billion. There was no material change to estimated potential concessions and other considerations to customers related to the 737 MAX grounding.

Commercial Airplanes has updated its production rate assumptions to reflect impacts from COVID-19 on its operations and demand outlook, and will continue to assess them on an ongoing basis. The 787 production rate will be reduced from 14 per month to 10 per month in 2020, and gradually reduced to 7 per month by 2022. The 777/777X combined production rate will be reduced to 3 per month in 2021. At this time, production rate assumptions have not changed on the 767 and 747 programs.

Commercial Airplanes delivered 50 airplanes during the quarter, including 29 787s. Commercial Airplanes captured an order for 12 787 aircraft for All Nippon Airways, and produced the 1000th 787 at Boeing South Carolina. Commercial Airplanes backlog included over 5,000 airplanes valued at $352 billion.

Boeing President and CEO Dave Calhoun issued the following letter to employees today addressing aerospace market realities:

Team:

The global pandemic has changed the way we live and work. It is changing our industry. We are facing utterly unexpected challenges. But across the world you are demonstrating the resilience, commitment and generosity to one another, our customers and our communities that Boeing people are known for. I deeply appreciate all that you do.

And if COVID-19 has affected you directly — your health, your well-being, your loved ones or your colleagues — you have my sympathy and support.

The pandemic is also delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability. The demand for commercial airline travel has fallen off a cliff, with U.S. passenger volumes down more than 95% compared to last year. Globally, commercial airline revenue is expected to drop by $314 billion this year.

As a result, airlines are delaying purchases for new jets, putting the brakes on delivery schedules and deferring elective maintenance. We’re also seeing a dramatic impact on our commercial services business, as grounded airline fleets decrease the demand for our offerings.

All of this puts near-term pressure on our cash flow. We’re taking steps to keep liquidity flowing through our business and supply chain. We’re reducing operating costs and discretionary spending, suspending dividend payments, extending our existing pause on stock buybacks, reducing or deferring R&D and capital expenditures, and accelerating some progress payment receipts with help from our defense customers. Our chairman and I are also foregoing our salaries for the year. And as you know, we’re exploring potential government funding options and advocating for access to credit for the entire aerospace manufacturing supply chain.

The aviation industry will take years to return to the levels of traffic we saw just a few months ago. We have to prepare for that. In today’s first-quarter earnings disclosure, we will be announcing a number of steps we’re taking to meet that new reality. Specifically, we will have to reduce commercial airplane production rates:

  • We expect to resume 737 MAX production at low rates in 2020, gradually increasing to 31 planes per month during 2021, with gradual increases to correspond to market demand.
  • We plan to reduce the 787 production rate to 10 per month in 2020 and to 7 per month by 2022, continuing to evaluate the rate after that.
  • We also plan to reduce the combined 777 / 777X production rate to 3 per month in 2021 and take a measured approach to the 777X rate ramp.
  • The 767 and 747 production rates will remain unchanged.

We have done a tremendous job of increasing our production rates and services offerings in recent years. But the sharp reduction in demand for our products and services over the next several years simply won’t support the higher levels of output.

We have worked hard to maintain the stability of our workforce, avoiding layoffs even through the grounding of the 737 MAX.

But these new reductions in our production rates and the continued impact of COVID-19 on our business will force us to reduce the size of our workforce. I’m sorry that I have to deliver this news, but I wanted you to hear it from me first — and I recorded a video message so you could hear it from me directly.

We have begun taking action to lower our number of employees by roughly 10% through a combination of voluntary layoffs (VLO), natural turnover and involuntary layoffs as necessary.

That is 10% in total for the enterprise. 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.

At the same time, the ongoing stability of our defense, space and related services businesses will help us limit the overall depth of the cut. And in the end, because there are so many unpredictable drivers for this crisis, we’ll have to monitor continuously what’s happening in our markets, and we will make adjustments whenever needed to ensure we’re matching the size of our business to the changing demand in the market.

I know this news is a blow during an already challenging time. I regret the impact this will have on many of you. I sincerely wish there were some other way.

Please know that we will do everything we can to minimize that impact, and as we take these steps, we will be as fair and transparent as possible — and absolutely honest and respectful.

The VLO program provides eligible team members with an opportunity to depart the company with a pay and benefits package. We also will provide support for those affected by involuntary layoffs, including severance pay, COBRA health care coverage and career transition services.

We are also making changes to start restructuring from the top so we’re ready for the new market reality — shrinking the size of my team by consolidating roles, simplifying processes and focusing accountabilities.

Please know this: Our industry and our company will get through this. Air travel has always been resilient over the long term, and our portfolio of products, services and technology is well-positioned for the recovery that will come.

And even as we deal with this crisis, we are pushing forward with our 2020 priorities:

  • We are progressing toward the safe return to service of the 737 MAX in close coordination with the U.S. Federal Aviation Administration and global regulators.
  • We’re making progress on our development programs, including the 777X, 737 MAX 10 and CST-100 Starliner.
  • We continue to support our defense customers with progress across our future franchise programs, including MQ-25, T-7A Red Hawk, MH-139A Grey Wolf and our extra large unmanned undersea vehicle.
  • Our Government Services business is growing as we earn new and follow-on business with our global defense customers, who look to us to support their fleet performance and mission readiness.
  • We continue our work on the KC-46A tanker. The outcome of this month’s agreement with the U.S. Air Force on the tanker’s Remote Vision System means KC-46 will become the standard by which all future refueling aircraft are measured.

I’d also like to address the latest news about Embraer: We announced Saturday that we have terminated the agreement we had to establish a strategic partnership between our two companies. We worked diligently for two years to finalize the transaction — one that would have included commercial and defense joint ventures. But ultimately we could not come to a resolution around critical unsatisfied conditions for the deal under our Master Transaction Agreement (MTA). It is deeply disappointing, but we had reached a point where continued negotiation was no longer helpful, so we exercised the rights set out in the MTA to terminate the agreement.

Looking ahead, we will continue to concentrate on what is most important across Boeing. We will continue to invest in the future. We will continue to focus on our values, and to drive safety, quality, integrity and operational excellence in everything we do.

I am confident that we will get through this difficult period because I am confident in all of you. And I am proud to be one of you.

Please stay safe, stay strong, and continue to take care of yourselves and one another. Thank you for everything.

Dave

Boeing to resume 787 operations in South Carolina

Boeing will resume 787 operations at Boeing South Carolina (BSC), with most teammates returning on May 3 or May 4. The return includes all operations that were temporarily suspended on April 8 in response to the COVID-19 pandemic.

Managers will contact each teammate returning to work with report date and shift information. Those who are not contacted should not return to the site until contacted by their manager to do so. Teammates who are able to work from home should continue to do so.

“The health and safety of our teammates, their families and our community is our shared priority,” said Brad Zaback, Boeing South Carolina site leader and 787 vice president and general manager. “Our approach to resumption of operations ensures we honor that priority by ensuring personal protective equipment is readily available and that all necessary safety measures are in place to resume essential work for our customers and prioritize the health and safety of our team. We have also taken the necessary steps to ensure a steady supply base for our operations.”

Senior leaders will return on Thursday, April 30, and managers will return on Friday, May 1, to prepare for the operations resumption. BSC teammates will return to work beginning with third shift on Sunday, May 3. First and second shift teammates will return to work on Monday, May 4.

BSC has taken extra precautions and instituted comprehensive procedures to prepare the work environment and ensure the health and safety of teammates. These measures include:

  • Enhancing cleaning of all buildings, including pressure washing of restrooms and thorough cleaning of break areas, cafeterias, conference rooms and other community spaces.
  • Posting of signage throughout the site to help keep enhanced cleanliness top-of-mind.
  • Adding new hand sanitization stations across the site.
  • Installing visual cues to reinforce physical distancing practices particularly in conference rooms, cafes and other community spaces.
  • Encouraging all teammates to bring and wear cloth face coverings. Some teammates will be required to wear procedural masks, which will be provided, in certain areas when working in close proximity.
  • Making voluntary temperature screening stations available for teammates on all shifts via no-touch thermal scanners.

Boeing will continue to monitor guidance on COVID-19, evaluate impact on company operations and adjust plans as the situation evolves.

Photo: Boeing.

Embraer claims Boeing “wrongfully terminated the MTA”

Embraer has issued this statement:

Embraer S.A., in compliance with the provisions of the CVM Instruction 358/02 and in connection with the strategic partnership between Embraer and The Boeing Company, informs its shareholders and the market that Embraer received a notice sent by Boeing communicating its decision to terminate the Master Transaction Agreement, based on Boeing’s assertion that supposedly certain closing conditions in the MTA have not been satisfied by Embraer.

Embraer strongly believes that Boeing has wrongfully terminated the MTA, that it has manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the US$4.2 billion purchase price. Embraer believes Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 MAX and other business and reputational problems.

Embraer believes it is in full compliance with its obligations under the MTA and will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing’s wrongful termination and violation of the MTA.

The Transaction involved a long, costly and complex process, which was supported by government authorities and the substantial majority of Embraer’s shareholders, all understanding that the Transaction would be in the best interest of Embraer, its employees, suppliers and customers in commercial aviation.

Embraer remains today a successful, efficient, diversified and vertically integrated company, with a history of serving customers with highly successful products and services built on a strong foundation of engineering and industrial capabilities. Embraer is an exporter and technology developer, with global presence and defense, executive and commercial businesses. Our employees will proudly continue to provide for our clients the high quality products and services they depend on from Embraer every day.

Embraer’s history of over 50 years is lined with many victories but also some difficult moments. All of them were overcome. And that’s exactly what Embraer is going to do again. Embraer shall overcome these challenges with strength and determination.

Embraer will keep its shareholders, the market in general, and all employees, suppliers and clients informed about any relevant updates.

Boeing terminates agreement to establish joint ventures with Embraer

Boeing has made this announcement:

Boeing announced today that it has terminated its Master Transaction Agreement (MTA) with Embraer, under which the two companies sought to establish a new level of strategic partnership. The parties had planned to create a joint venture comprising Embraer’s commercial aviation business and a second joint venture to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft.

Under the MTA, April 24, 2020, was the initial termination date, subject to extension by either party if certain conditions were met. Boeing exercised its rights to terminate after Embraer did not satisfy the necessary conditions.

“Boeing has worked diligently over more than two years to finalize its transaction with Embraer. Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. We all aimed to resolve those by the initial termination date, but it didn’t happen,” said Marc Allen, president of Embraer Partnership & Group Operations. “It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues.”

The planned partnership between Boeing and Embraer had received unconditional approval from all necessary regulatory authorities, with the exception of the European Commission.

Boeing and Embraer will maintain their existing Master Teaming Agreement, originally signed in 2012 and expanded in 2016, to jointly market and support the C-390 Millennium military aircraft.

Boeing activates airlift capabilities for first COVID-19 transport mission

Boeing made this announcement:

A Boeing-owned aircraft loads 540,000 medical-grade masks in China destined to New Hampshire. (Boeing photo)

Boeing on April 18 completed its first COVID-19 transport mission, using a 737-700 aircraft from its corporate fleet to bring personal protective equipment (PPE) from China to the United States. Working in partnership with FIRST® Robotics Founder Dean Kamen, the company transported 540,000 medical-grade face masks that will be delivered to healthcare professionals battling COVID-19 in New Hampshire.

Kamen, who has a longstanding relationship with Boeing through FIRST Robotics, is also a founder of DEKA Research and Development Corporation. He worked with DEKA to secure the face masks from manufacturers in China and turned to Boeing to facilitate their transport. DEKA is the importer of record for the delivery and provided the masks to New Hampshire for distribution to healthcare professionals in the state.

(Boeing photo)

“Another life-saving delivery of PPE has arrived in New Hampshire,” said Governor Chris Sununu. “Thanks to Dean Kamen for facilitating this deal, and to Boeing for donating the cost of this mission transport. The state will deliver these masks to the greatest areas of need across New Hampshire so those on the frontline have the necessary resources to fight COVID-19.”

“Boeing has been a long-time partner of FIRST Robotics and I’m proud that I can again partner with the Boeing team to meet the needs of our frontline healthcare professionals fighting COVID-19,” said Kamen. “Now more than ever, help from companies like Boeing is critical so we can continue to make sure protective equipment gets to the people who need it most.”

Boeing continues to support local communities and the heroic healthcare professionals working tirelessly to stop the spread of COVID-19. Additional airlift transport missions with the Boeing Dreamlifter and ecoDemonstrator are planned in the future. Boeing is coordinating closely with U.S. government officials on how to best assist areas with the greatest need.

“I want to personally thank Governor Sununu, the entire New Hampshire congressional delegation and Dean Kamen for their leadership in helping secure and distribute this much-needed personal protective equipment for our frontline healthcare workers and first responders here in New Hampshire,” said Dave Calhoun, Boeing president and CEO. “We are honored to have conducted today’s airlift mission and we look forward to providing continued support in the fight against this pandemic.”