A United Airlines plane sits on the tarmac at San Francisco International Airport.
Justin Sullivan | Getty Images
The Chicago-based airline’s September capacity will be 37% of year-ago levels and a 4 percentage point increase from its August 2020 schedule.
United has been among the most conservative airlines when it comes to restoring flights. A spike in demand recovery stalled after coronavirus cases surged in the U.S. and states like New York and New Jersey issued quarantine orders for arriving travelers.
International capacity, which has been the hardest hit by broad travel restrictions around the world, will be 30% of United’s September 2019 schedule, through the airline is adding routes such as Chicago to Tel Aviv, Chicago to Hong Kong and Houston to Amsterdam, among others. Domestic flying will be 40% of its September 2019 schedule.
A pilot works in an F/A-18F Super Hornet fighter aircraft, aboard the USS Nimitz (CVN 68) aircraft carrier while at sea, on January 18, 2020 off the coast of Baja California, Mexico.
Mario Tama | Getty Images
Boeing CEO Dave Calhoun said Wednesday he was confident that whoever wins the White House in November — whether it’s President Donald Trump or former Vice President Joe Biden — will continue ssupporting the defense industry.
“I think both candidates, at least in my view, appear globally oriented and interested in the defense of our country and I believe they’ll support the industries,” Calhoun said on a media call. “They’ll do it in different ways and they’ll have different teams for sure, but I don’t think we’re going to take a position on one being better than the other.”
The Trump administration, lawmakers and political candidates are under increasing pressure to come up with ways to aid the U.S. through the coronavirus pandemic and accompanying economic turmoil.
Defense spending is taking on new importance for the aerospace giant, one of the largest U.S. defense contractors, as its commercial aircraft unit reels from the coronavirus pandemic. The turmoil drove Boeing to a $2.4 billion loss in the second quarter, prompting further cuts to production of planes like the 787 and the possibility of job cuts beyond the roughly 19,000 people the company said are leaving Boeing.
Revenue for Boeing’s defense and space unit was little changed from the second quarter a year ago at $6.6 billion, but sales at its commercial aircraft unit plunged by more than 65% year-over-year to $1.6 billion.
The trend has been echoed at other companies like Raytheon Technologies that have both commercial and defense businesses.
“Overall, while the pandemic continues to deeply impact our commercial aero business, our balanced portfolio includes a resilient defense business that will help us offset near-term commercial aero headwinds,” said CEO Greg Hayes during an analyst call on Tuesday.
The White House didn’t comment. Representatives for both Trump and Biden’s presidential campaigns didn’t immediately comment.
Defense contractors have good reasons to be concerned. Across the country, incumbent Republicans are being dragged down by the president’s poor approval ratings, despite efforts by some candidates to distance themselves from Trump’s positions. Still, most analysts now believe Democrats are well positioned to expand their majority in the House and, increasingly, to win the four Senate seats they need to take control of the upper chamber.
Boeing’s Calhoun brushed off the possibility about an impact to the industry because of a potential shift in Congress, saying lawmakers “tend to come together” on policies that support jobs.
Dave Calhoun, Chairman of Boeing.
Adam Jeffery | CNBC
Boeing CEO Dave Calhoun on Wednesday said he was “hopeful” that demand for new aircraft, devastated by the coronavirus pandemic, would start rebounding in the second half of next year.
Cancellations of Boeing planes are outpacing new orders this year as airlines reel from the impact of the virus and the company’s key 737 Max remains grounded.
Calhoun said he expects an uneven recovery from the pandemic for airlines around the world and that carriers that emerge healthy might want to gain an advantage over competitors with newer planes, driving demand.
“China, Europe seem to have a little more control over their environments than the U.S. does at the moment,” Calhoun said in an interview with CNBC’s “Squawk on the Street.” “It’ll happen and I believe somewhere in, depending on a vaccine and the success and distribution of a vaccine, somewhere in the second half of next year I’m hopeful that this worm turns.”
Boeing posts net loss of $2.4 billion and slows aircraft production amid coronavirus-weakened demand
Boeing 737 MAX airplanes, along with one Boeing 787 at top, are parked at Grant County International Airport October 23, 2019 in Moses Lake, Washington.
David Ryder | Getty Images
Boeing posted a $2.4 billion loss for the second quarter and said it plans to slow production of its main commercial aircraft as the coronavirus pandemic hurts demands for new planes and its best-selling 737 Max jets remain grounded.
The pandemic has driven up financial losses at Boeing’s airline customers and hurt demand for new planes, though Boeing was in crisis before coronavirus spread around the world. Boeing’s shares are trading at roughly half their value from a year ago, and its best-selling plane, the 737 Max, has been grounded since March 2019 following two fatal crashes. Regulators aren’t expected to clear the planes to fly again before the fall.
Here’s what Wall Street is expecting, based on average analysts estimates compiled by Refinitiv.
- EPS: A loss of $2.54 per share
- Revenue: $13.16 billion expected.
The lengthy grounding of the 737 Max along with financial pain at carriers has driven up cancellations of new Boeing jetliners this year, meaning less cash for manufacturers and suppliers.
Boeing is set to detail the impact of weaker demand for its aircraft and deferrals of new orders, a soured outlook that has rippled down to big suppliers like engine-maker General Electric and Spirit Aerosystems. Spirit, which makes the fuselages for the Max, asked lenders to loosen the terms on some of its debt, sharing a forecast for far fewer deliveries of the 737s than originally expected, according to a forecast seen by CNBC. Boeing has more than 470 planes sitting on the ground that haven’t been delivered to customers, most of them 737 Max jets, according to consulting firm Ascend by Cirium.
Airbus, Boeing’s main rival, is set to report results on Thursday.
Boeing’s CEO Dave Calhoun in April said air travel demand will likely take two or three years to recover. International demand has been particularly soft, hurting the outlook for Boeing’s widebody commercial planes, like the 787 Dreamliner. The International Air Transport Association, a trade group that represents most of the world’s airlines, on Tuesday said it expects passenger air travel demand globally to recover to 2019 levels in 2024, a year later than it previously forecast.
The company has been slashing costs and said this spring it aims to cut 10% of its workforce of about 160,000 people. It has also shored up liquidity with a monster $25 billion debt sale in April, Boeing’s largest ever, to help weather the crisis.
Boeing executives will detail results on a 10:30 a.m. ET call on Wednesday.
This story is developing. Please check back for updates.
A Jet Blue aircraft takes off from Long Beach Airport in Long Beach, CA.
Tim Rue | Bloomberg | Getty Images
JetBlue Airways on Tuesday said it swung to a loss in the second quarter and forecast that revenue will fall by about 80% in the third quarter as the coronavirus pandemic promises a choppy recovery in travel demand.
The New York-based airline carried just 616,000 passengers in the three months ended June 30, down more than 94% from the 11 million that flew JetBlue in the same period last year. Revenue plunged about 90% from the second quarter of 2019 to $215 million from more than $2.1 billion during the same three months last year.
JetBlue is the latest airline to detail financial losses stemming from the coronavirus crisis, which kept millions of would-be travelers at home. Executives are warning that while demand bottomed out in the spring, a choppy recovery is ahead because of a surge in virus cases and new travel restrictions.
The carrier, like its competitors, slashed flights in an effort to cut costs as demand fell.
JetBlue posted a net loss of $320 million in the three months ended June 30, down from net income of $179 million a year earlier.
Shares in the airline were up 0.3% in premarket trading. Company executives will detail its results and outlook in a 10 a.m. ET call.
An employee drills holes for rivets in a frame inside a Boeing 737 fuselage during assembly at Spirit AeroSystems in Wichita, Kansas.
Daniel Acker | Bloomberg | Getty Images
Key Boeing supplier Spirit Aerosystems told lenders this week that the aircraft manufacturer expects sharply lower deliveries of 737 Max planes in the coming years than previously expected, according to a person familiar with the matter.
Boeing’s best-selling aircraft has been grounded since March 2019 after two fatal crashes killed 346 people. The planes’ recertification has been hit by repeated delays and now faces a devastated aircraft market as airlines rethink their fleets while the coronavirus pandemic saps travel demand and their financial losses pile up. The Federal Aviation Administration is moving ahead with its tasks to approve the planes for flight again, but the planes aren’t expected to be cleared to fly before the fall.
Spirit, which makes fuselages for the 737 Max, was talking to lenders to loosen terms of some of its debt, according to the person familiar with the matter, who asked not to be named because the discussions are private.
Spirit shared a forecast with lenders that showed deliveries this year of the Boeing 737 of around 70 compared with a previous forecast of a little more than 200, while next year’s deliveries of the narrow-body plane would likely come in at less than half an earlier forecast of 400 planes, according to a Spirit presentation slide that was viewed by CNBC. In 2022, Boeing’s 737 deliveries were projected at fewer than 400 planes, a decline from a previous forecast of almost 500.
Those estimates are also lower than what some analysts are expecting. Jefferies, for example, estimated deliveries of the 737 at 370 in 2021 and 480 in 2022, according to a July 14 report. Deliveries are crucial to aircraft manufacturers and their suppliers because it’s when customers pay the bulk of the planes’ price.
Spirit declined to comment on the talks, saying in a statement to CNBC it “does not detail conversations that we have on an ongoing basis with our financial institutions or customers.”
Spirit shares were down 1% in premarket trading while Boeing’s were off 0.8%.
Boeing makes two different 737 models, the older NG and the top-selling Max. Spirit did not differentiate between models in the forecast it provided to lenders, but the 737 Max is Boeing’s newest and most popular model of the plane, which has been flying since the 1960s. Boeing has a backlog of around 4,000 of the 737 Max planes.
The Wichita, Kansas-based Spirit last week said it would extend furloughs for some of its workers for up to 60 days “for those employees currently on temporary layoff due to their working on or supporting the 737 program.”
Boeing spokesman Bradley Akubuiro declined to comment on the delivery forecast. He said the company values its suppliers and is working closely with them “to ensure we all emerge from this situation strong, healthy and prepared for the future. We are being extremely transparent and having frequent conversations with our suppliers.
“In addition to working with our suppliers on issues related to financial health, we are using this downturn to re-focus our energy on safety, quality and a stable production system for the future, both within Boeing and our extended supply chain,” he added.
Boeing is set to report second-quarter results on July 29. Spirit is scheduled to release results on Aug. 4.
Jets are parked on runway 28 at the Pittsburgh International Airport on March 27, 2020 in Pittsburgh, Pennsylvania.
Jeff Swensen | Getty Imageas
American Airlines posted a net loss of $2.1 billion in the second quarter, the latest carrier to outline the financial damage to travel demand from the coronavirus pandemic.
American carrier has added more capacity back than some of its large competitors like Delta or United than some of its peers in adding capacity back to the market as aimed to capitalize on an uptick in air travel demand that bottomed out in April.
Investors are focused now on airlines’ cash burn rates. In addition to parking hundreds of jetliners and slashing routes, carriers are gearing up to shed more workers as the Oct. 1 expiration of the terms of federal aid that prohibit job cuts approaches.
American Airlines’ executives will hold an analyst call at 8:30 a.m. EDT.
A pilot talks on a mobile device near a Delta Air Lines gate at the Salt Lake City International Airport.
George Frey | Bloomberg | Getty Images
Delta Air Lines is seeking to reduce the guaranteed minimum pay for pilots, a proposal an airline executive said Friday could avoid furloughs for a year as the threat of job cuts looms and a quick recovery in air travel becomes increasingly remote because of new coronavirus cases.
More than 60,000 airline employees across several carriers have been warned this month that their jobs are at risk, including more than 2,500 of Delta’s more than 14,000 pilots, when the terms of billions of dollars in federal payroll support expires Oct. 1.
Delta and other airlines are urging employees to take early retirements, buyouts and other forms of leave to slash costs as financial losses pile up. More than 1,700 pilots have signed up for early retirements, according to a memo from John Laughter, Delta’s senior vice president of flight operations, which was reviewed by CNBC.
The Atlanta-based carrier is proposing that the pilots’ union agree to lower pilots’ minimum guaranteed pay by 15%, according to the memo.
“Our approach is to spread the work of a smaller airline among all our pilots to preserve all jobs – that would be unheard of in our history,” Laughter wrote. “But we cannot do it only with voluntary options such as [voluntary early out programs] and paid leaves. This has been shown at our competitors with WARN notices being issued even with paid leaves being offered.”
The Air Line Pilots Association, which represents Delta’s pilots, didn’t immediately comment.
Furloughing pilots is a gamble for airlines, which don’t want to have a shortfall if there is a recovery in travel demand. Pilot cuts can mean costly and time-consuming training later on.
Delta CEO Ed Bastian this week said more than 17,000 of the airline’s roughly 90,000 employees have signed up for buyouts or early retirement programs, and thousands more have signed up for temporary leaves.
He warned that the airline is “unfortunately still overstaffed in some areas of the business.”
“But we’re committed to exhausting every option possible and harnessing our creativity before we consider involuntary separations,” he said in a staff memo Thursday. “We’re investigating every staffing opportunity, including temporarily shifting people between divisions, insourcing work previously done by contractors, and continuing our work hour reductions as needed to share the work across the company.”