Boeing Co (NYSE:BA) continues to face financial stress amid the pandemic and now the company has said it will cut its 787 Dreamliner output by mid-2021. Greg Smith the company’s CFO said that the company trims output to five planes per month from six as previously planned as travel demand continues to suffer.
International travel demand remains low impacting 787 output
Smith said that international travel demand has dropped almost 90% since last year which has impacted wide-body markets demand. Last month the company didn’t deliver any wide-body jets and Smith confirmed that December shipments will continue to slow as Boeing inspects the aircraft for production flaws. The wide-body jets are vital in long-haul international travels which industry analysts predict to be the last to recover from the effects of the pandemic.
Dreamliners’ deliveries have been slower because of the inspections due to manufacturing issues the company reported in September. Smith said that they are taking more time to inspect the 7787s to ensure that they deliver the highest quality standards. In October in an earnings call, the manufacturer said that they expected a “big fourth quarter on 787 deliveries.”
The lower Dreamliner output and the need for the company to issue stock underlines the pressure Boeing faces even as the beleaguered 737 Max resumes operations from 20-month grounding. Last month the Federal Aviation Administration lifted restrictions on the 737 Max after a series of upgrades. The 737 Max was grounded in March 2019 after two fatal crashes.
Boeing focusing on repaying its debt
At the beginning of this year, the company took a $30 billion debt to bolster its liquidity as COVID-19 swept the globe gutting air travel and new aircraft demand. Smith said that in terms of capital deployment the company focuses on paying down the debt. He added that as much as the company will continue investing in the business they need to get the debt balance down. For now, the company has adequate cash reserves to see it through the pandemic until vaccines become widely available.