Boeing reports strong end to its worst year in decades

Boeing ended its worst year in more than 40 years with its best month of 2020.

The company reported that it delivered 39 jets to customers in December — and deliveries are important because that’s when Boeing gets most of the money owed for a plane.

But doesn’t change the full year or near-term outlook for Boeing, which is struggling to recover from the dual crises of the 737 Max grounding and the pandemic-fueled plunge in air travel. The company has been slashing production rates and cutting staff in response to the financial crisis hitting its airline customers.

That comparatively stellar December delivery figure brought Boeing’s total 2020 deliveries to only 157, the lowest figure for the aircraft maker and its predecessor companies since 1977.

By contrast, Boeing delivered a record 806 commercial jets as recently as 2018, helping to lift annual revenue above the $100 billion mark for the first time that year. Now analysts forecast Boeing will report revenue of only $58 billion in 2020, and $78 billion in 2021.

Notably, Boeing was able to deliver 27 737 Max jets in December, the first deliveries of the troubled aircraft since its grounding of the plane in March 2019 following two fatal crashes. The US Federal Aviation Administration cleared the 737 Max to again fly passengers in late November, and Boeing delivered 10 to American Airlines, eight to United and one to Panamian carrier Copa, with the rest going to leasing companies. The deliveries came from the backlog of planes that it continued to build during the grounding.

But it’s not just the 737 Max problem that hit the company’s deliveries in 2020.

Airlines grounded most of their existing fleets when air travel ground to a near halt early in 2020 — so, desperate to preserve cash, many delayed deliveries of planes they had expected to receive during the year. Beyond the 27 737 Max jets, Boeing delivered no other passenger jets in December: The other deliveries consisted of nine freighters and three military versions of commercial planes.

“As we continue navigating through the pandemic, we’re working closely with our global customers and monitoring the slow international traffic recovery to align supply with market demand,” said Boeing CFO Greg Smith. “In 2021, we’ll continue taking the right actions to enhance our safety culture, preserve liquidity and transform our business for the future.”

On the orders side, Boeing reported 90 new orders in December, including 75 additional 737 Max jets for Ryanair, by far its biggest firm order for the plane in more than two years.

But that boon was more than balanced out by 107 earlier orders that were canceled during the month, mostly for the Max.

For all of 2020, orders for 184 jets were more than wiped out by 655 canceled orders, the biggest hit to its order book that the Boeing has ever suffered.

The company also said it is no longer confident enough about 555 existing orders to still count them in its backlog, either because of its airline customer’s financial condition or because the airline has started discussions of canceling an order.

But even with the canceled and now-uncertain orders, Boeing managed to end the year with an order backlog of 4,223 planes.

While the December numbers were an improvement from the rest of the year, they were apparently a disappointment for investors. Boeing shares were trading about 1% higher ahead of the 11 am ET report, but they were down 0.8% after the release.