Jan 26 (Reuters) - Boeing is expected on Wednesday to report a record annual loss and that it hemorrhaged $20 billion in cash last year, as the resurgence of the coronavirus pandemic slows its recovery from a separate crisis around its 737 MAX jet.
The U.S. planemaker’s deliveries slumped to a 43-year low in 2020 as the pandemic drove a collapse in air travel. With infections on the rise again, a number of analysts now say Boeing’s hopes of delivering about half of the 450 737 MAXs it has in storage this year are “ambitious”.
“Physical deliveries do not appear to be an issue, with the challenge being getting carriers to take them,” J.P.Morgan analyst Seth Seifman said.
Boeing is heavily reliant on the income it receives from actual jet deliveries and shipments of 737 MAX are seen as the key to its financial recovery, after the U.S. cleared the jet to fly again in November following a 20-month ban.
The MAX made up about 40% of cash flow in the commercial airplane unit before its grounding in 2019.
“The downside risk is that the 737 MAX production stays in the single digits through this year,” Jefferies analyst Sheila Kahyaoglu said, adding it would hit its target of 31 per month a year later than planned in early 2023.
Kahyaoglu expects Boeing to ship only 102 737 MAX jets from its stored inventory in 2021, compared with the company’s plan of shipping 225 planes. That would take total deliveries to 328 planes, according to Kahyaoglu’s estimate, down 60% from a record in 2018 but more than double those in 2020.
Coronavirus-led travel bans have also depressed shipments of Boeing’s second most important cash generator - the 787 Dreamliner, used for long-haul travel - and analysts are worried that Boeing could be forced to cut its production rate for the fifth time in less than two years.
“The pandemic has accelerated a shift away from twin aisles and towards single aisles,” Teal Group analyst Richard Aboulafia said. “Since there’s already a built-up inventory of dozens of 787s, we’ll likely see another production rate cut.”
Deliveries of Boeing’s 787 slumped nearly 70% to 53 planes in 2020 and are not expected to recover to 2019 levels until at least 2024.
Nine of 13 brokerages have revised their 2020 free cash flow outlook for Boeing in the past 30 days, with the average revision being down 11%, according to Refinitiv data.
Analysts expect Boeing’s free cash flow to improve by more than $16 billion in 2021, driven by the start of 737 MAX deliveries, but the figure is still expected to remain negative at about $4 billion, before becoming positive in 2022.
They expect Boeing to report a record net loss of $5.74 billion, with revenue slumping to the lowest in 15 years at $58 billion, according to IBES estimates from Refinitiv. (Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva)