Boeing CEO: industry faces retraction
Boeing CEO David Calhoun told shareholders Monday that the coronavirus pandemic is likely to pummel the aircraft industry for the next two or three years and leave it smaller after recovery.
In the US, about 2,800 passenger jets are idled while demand for air travel is down about 95 percent.
Analysts expect worldwide airline revenue to plunge by billions of dollars this year. As a result, airlines have canceled orders for new planes. There will be no immediate turnaround, even as some states and countries take initial steps to restart the economy.
"The health crisis is unlike anything we have ever experienced," Calhoun told investors via an online-only annual meeting. "It will be years before this returns to pre-pandemic levels. People will still want to fly, and they will fly. I believe we will return to a robust market. It's a question of how long it takes."
The CEO said the market will be different when large numbers of people return to commercial airlines.
"We are in an unpredictable and fast-changing environment, and it's difficult to estimate when the situation will stabilize," he said. "But when it does, the commercial market will be smaller, and our customers' needs will be different."
Boeing is scheduled to report first-quarter earnings before the market opens Wednesday.
Analysts expect the company to report a significant loss, reflecting the downturn in air travel as individuals and businesses cut back during the COVID-19 pandemic.
The consensus estimate for the quarter is a loss of $2.08 a share compared with earnings of $3.16 a share for the same quarter a year ago, according to a survey of five analysts by Zacks Investment Research.
Nevertheless, 18 analysts surveyed by TipRanks rate Boeing's stock a moderate buy. The stock-price target is $179.44, or about 40 percent above Monday's intraday price.
Boeing's shares have dropped about 57 percent this year.
In January, Boeing reported a loss of $636 million for fiscal year 2019 compared with a profit of $10.46 billion in 2018 — its first annual loss in more than 20 years. Boeing suspended dividends in March to conserve cash. The CEO and chairman of the board agreed to forego pay through 2020.
The company reported a fourth-quarter loss of $2.33 a share, missing the consensus earnings estimate of $1.47 by $3.80.
Revenue totaled $17.91 billion for the quarter. Analysts expected $21.76 billion, a decline of 36.8 percent from the same quarter a year ago.
In January, the company temporarily halted production of the 737 MAX, its top-selling plane.
The MAX has been grounded worldwide since March 2019 following crashes in Indonesia and Ethiopia that killed a total of 346 passengers and crew.
Boeing hopes the MAX will be recertified for commercial service this summer, but the Federal Aviation Administration said there is no timetable to get the plane back in the air.
