Boeing lost orders last year for the first time in three decades, as the 737 Max crisis impacted the company’s reputation and finances.
The aerospace company reported on Tuesday that it had 87 more cancellations than new purchases in 2019. The figures included the cancellation of three 787 Dreamliners in December. In the same month, Boeing failed to book any 737 Max orders as customers avoided the model after two fatal crashes that have led to a worldwide grounding.
Boeing delivered 380 commercial airplanes in 2019, the lowest level since 2007, and fewer than half the 786 planes its main rival Airbus delivered last year, a record for the European jet maker.
Boeing’s numbers are especially bleak compared with Airbus’s 768 orders for new planes for 2019. The European plane maker currently has a 10-year production backlog on orders, or 7,482 commercial planes, while Boeing finished the year with a backlog of 5,406.
Boeing’s new chief executive, David Calhoun, who took over the leadership position on Monday, said in an email to employees that returning the Max to service is his top priority. “We’ll get it done, and we’ll get it done right,” Calhoun wrote.
But Calhoun, a Boeing employee since 2009, is already facing investor criticism over his potential bonus if the once bestselling 737 Max successfully returns to service. According to a regulatory filing, Calhoun will receive a $7m payout for the “full safe return to service” of the Max, in addition to base salary of $1.4m and a guaranteed $2.5m cash bonus.
That comes after Boeing revealed on Friday that its former chief executive Dennis Muilenberg will receive $62m in additional compensation despite presiding over the worst crisis in the company’s history.
The sales slump comes in another punishing week for Boeing. Last Thursday, the company released internal emails that showed executives mocking the Federal Aviation Administration (FAA), its regulator and joking that the 737 Max had been “designed by clowns”.
In messages one of Boeing’s technical pilots – employed to work with airlines and regulators on training – lambasted a Malaysian airline for asking for a flight simulator to train pilots. Boeing had argued costly simulators were unnecessary because the Max was so similar to the previous 737 model.
“Now frigging [airline name redacted] may need a sim to fly the Max, and maybe because of their own stupidity,” the pilot wrote in 2017, before the fatal crash of Lion Air’s Max in October 2018. “I’m scrambling to figure out how to unscrew this now! idiots,” he added. Boeing has now decided simulators are necessary.
The release came as regulators around the world are investigating the crash of a Lion Air 737 Max and another operated by Ethiopian Airlines that claimed 346 lives.
Before the crashes the 737 Max was the bestselling plane Boeing had ever built. It must now wait for the FAA to give its approval for the 737 Max to return to service before it can expect sales to pick up again.
The FAA has not said when it expects to allow the Max to fly again, though many airlines are hoping the latest version of the 737 will be back in service this Spring. On Tuesday American Airlines said it was pulling the Boeing 737 Max from its schedules until early June.
The grounding of Max has had a wider impact on the US economy. Boeing is the US’s largest export manufacturer and some 8,000 companies supply the company with parts.
Last week Spirit AeroSystems, Boeing’s largest supplier, announced it was laying off 20% of its staff as a result of the grounding. The move will affect 2,800 workers at Spirit’s facility in Wichita, Kansas, and the company has warned that there may be more layoffs to come.
Spirit supplies the fuselage, thrust reversers, engine pylons and wing components for the Max and the sales account for half of its revenues.
