Boeing Co. (NYSE: BA) reported first-quarter 2020 results before markets opened Wednesday. The aerospace company posted an adjusted diluted per-share loss of $1.70 on revenues of $16.91 billion. In the same period a year ago, the company reported earnings per share (EPS) of $3.16 per share on revenues of $22.92 billion. First-quarter results also compare to consensus estimates for a per-share loss of $1.58 on revenues of $17.31 billion.
Boeing also announced a 10% reduction in its global workforce of 160,000 employees through a combination of voluntary layoffs, natural turnover and involuntary layoffs “as needed.” The job cuts will reach more than 15% in the commercial aircraft and services business and in Boeing’s corporate offices.
The job cuts in the commercial aircraft segment are the result of planned reductions in aircraft production rates. Boeing said it expects to resume 737 Max production at “low rates,” increasing to 31 per month by the end of next year. The company’s production rate before halting new manufacturing was 42 per month, with plans to increase to 52 by next year.
Production of the 787 will drop from 14 to 10 per month this year and fall to seven per month in 2022. The production rate for the 777 and 777X will slip from five to three per month in 2021, and the company plans a “measured” ramp for the new 777X. The rate for 747 production will remain at six per year, and 767 production will increase from 2.5 per month to three. The 767 is the model that is reconfigured for Boeing’s KC-46 refueling tanker.
The company’s operating cash flow was a negative $4.30 billion, compared to a year-ago total of $2.79 billion. Free cash flow was a negative $4.73 billion in the quarter, compared to $2.29 billion in the same period last year. FactSet had a consensus estimate for negative free cash flow of $5.79 billion.
In the company’s commercial airplane division, revenues were down by 48% and the loss from operations totaled $2.1 billion. Defense division revenues were down 8% and the operating loss totaled $191 million. The global services division posted earnings from operations of $708 million, a year-over-year increase of 8%.
Combined with the costs related to the grounding of the 737 Max, Boeing expects total “abnormal” production costs from the temporary suspension of product to total approximately $5 billion.
The announced involuntary job cuts should have been expected. The company did not indicate whether it will seek help from under the federal CARES Act. Boeing has until Friday to decide whether to accept federal funds that have been earmarked for national security priorities. What Boeing may have to give up in order to get that aid is likely to determine whether it chooses to accept the funds.
Boeing shares are up more than 6% in Wednesday’s premarket, at $138.90 in a 52-week range of $89.00 to $391.00.