Boeing Plans on Delivering 225 737 MAX Backorders Throughout 2021

As the COVID-19 pandemic and the grounding of the 737 MAX troubles The Boeing Company, the aerospace manufacturer says they are planning to deliver half of the completed airframes in storage by the end of 2021. As a whole, the company reported a $754 million core operating loss for the third quarter of 2020, driven primarily by the viral outbreak.

With the Boeing 737 MAX preparing to ferry passengers once again under a new airworthiness directive, The Boeing Company says they plan on sending out half of their completed backstock to customers by the end of 2021. The aerospace giant made the announcement during their 2020 third quarter earnings call on Wednesday, Oct. 28, 2020.

Boeing 737 MAX Grounding Created Over $9 Billion in Liabilities

The call began with chief executive David Calhoun acknowledging the two-year anniversary of the Lion Air Flight 610 crash on Oct. 29, the first of two fatal 737 MAX accidents which forced a worldwide grounding of the airframe. After delivering comments on the current state of the company, executive vice president of enterprise operations Greg Smith offered insight on the 737 MAX program.

If the Boeing 737 MAX is recertified by the Federal Aviation Administration and other international operators before the end of the year, the commercial aircraft division anticipates they can begin new deliveries to customers in 2020. However, getting through the backlog of aircraft will take some time, as the company says they have around 450 completed and in storage.

“We expect to have to re-market some of these aircraft and potentially reconfigure them, which will extend the delivery time frame,” Smith said on the call, according to a transcript published by AlphaStreet. “We now expect delivery of about half of the aircraft currently in storage by the end of next year and the majority of the remaining in the following year.”

Even grounded, the 737 MAX is costing Boeing in ways they could not have previously anticipated. Alongside abnormal costs from the 737 program cutting into third quarter profits, the troubled airframe created a $9.1 liability for the Chicago-based company. So far, Boeing says they have paid out $3.1 billion to customers in cash “and other forms of compensation,” with settlement agreements totaling $2.6 billion.

“We continue to address the impact individually customer by customer, including assessing the efforts of the MAX disruption is having on their operations in light of the COVID impact,” Smith said. “We also continue to expect any concessions or other considerations to be provided over a number of years with the cash impact to be more front-end loaded in the first few years.”

Company Drops $754 Million in Third Quarter of 2020

Despite having a backlog of over 4,300 aircraft on their books valued at $393 billion, the aircraft manufacturer was directly affected by the COVID-19 pandemic. The company posted a $754 million core operating loss for the quarter, or a loss of $1.39 per share.

Also like the airlines, Boeing says they are planning to continue reducing staff numbers through natural attrition, alongside voluntary and involuntary workforce reductions. The company said on their earnings call they would be responsible for paying the severance costs of 7,000 employees through the end of 2021.