Boeing is Reporting $569 Million Loss and Scaling Down Its 747 Production
Boeing will report its Q4 result and the aircraft manufacturer is suffering loss of $569 million after-tax. The company will also cut the production of its world-famous 747 jumbo jet starting September.
Since its founding in 1916, Boeing has made its landmark in the aircraft industry in either military and civilian aircraft. Boeing B-29 Superfortress was the plane that delivers atomic bomb in Hiroshima and Nagasaki to end the World War II, and have been tested in many missions. Boeing enter the commercial jet era in 1950's with its 367 prototype and later developing Boeing 707 in 1958.
Its Boeing 747 was first designed in 1960's to cater demand for long distance air travel that is capable of carrying more passengers. Boeing's first customer of 747 was PanAm Airways that ordered 25 units of the 747-100 airplanes. Easily recognized with its hunchback, the 747 airplane has been the most popular long-range jet airliner.
Boeing 747 was dubbed as "Jumbo Jet" or "Queen of the Sky" and renowned for its size and huge passenger capacity. Since its first introduction in January 1970 for PanAm Airways, there have been more than 1,500 units of Boeing 747 had been built and carrying more passengers than any airplane. However, since the demand of more efficient passenger jet airplane is increasing, Boeing 747 has to give way to its younger siblings, the more efficient Boeing 777.
As for now, 747 is more reliant to air-cargo market, but the slow growth in international trade has reduced demand significantly. According to Wall Street Journal, quoting Ray Conner, vice chairman and head of Boeing's commercial airplane unit in a statement, "Global air passenger traffic growth and airplane demand remain strong, but the air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 freighter."
The leading planemaker will start to reduce its production to six aircraft a year starting September 2016, as order for 747 has shrunk quite significantly. According to Bloomberg, Boeing had just 20 unfilled orders for the 747-8, the latest jumbo model, as of December. The company only received two orders last year, one of which is from Russia's AirBridgeCargo Airlines.
Overall, CNBC reported that Boeing did not see weakness in its air passenger travel market, but it cited a 1.2% year-over-year contraction in air freight traffic in November. In regard to the air cargo market, Greg Smith, Boeing's chief financial officer said, "We are closely monitoring the air cargo market as we work to win additional orders to support ongoing future production."
As its fourth quarter report is showing after-tax accounting loss, Boeing made a significant strategic desicion to scale down output of its most-famous 747 jumbo jet to begin in September. This will release the burden of the world leading aircraft manufacturer to focus on its more profitable products.