Boeing says aircraft deliveries in 2020’s first quarter may take a hit amidst the Coronavirus outbreak in China

on Feb 13, 2020
Updated: Mar 11, 2020
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  • Boeing says aircraft deliveries in 2020’s first quarter may take a hit amidst the Coronavirus outbreak in China.
  • Boeing says it delivered 13 planes in January and has not received any new order.
  • 75% of the scheduled flights to, from, and within China have been canceled.
  • Boeing is expected to remain under pressure in 2020 amidst the new challenges.

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Challenges keep on piling for the largest American airplane manufacturer, The Boeing Company. In a recent development, the plane manufacturer declared imminent delays in aircraft deliveries in 2020’s first quarter ascribed to the recent outbreak of Coronavirus in China. The epidemic has weighed on business operations with traffic dropping sharply in Asia.

Boeing also announced recently that only 13 planes were delivered in January and the company has so far not received any new order for aircraft. Following 45,000 people infected and over 1,100 deaths attributed to the Coronavirus, the World Health Organization (WHO) branded it on January 30th as a global health emergency despite the virus being primarily contained within China. WHO used the COVID-19 code for Coronavirus.

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75% Of Scheduled Flights To, From, And Within China Have Been Canceled

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In an attempt to contain the Coronavirus spread, global airlines including the prominent carriers in the U.S have recently announced the suspension of flights to and from China. The health crisis has translated into a sharp decline in demand as well. From January 23rd to February 11th, 75% of the scheduled flights (over 85,000 as per the statistics) have been canceled no only to and from, but also within mainland China.

CFO Greg Smith of Boeing was reported commenting on Wednesday that the company is committed to evaluating the expected impact of the virus outbreak on its performance while working diligently with the Chinese customers to resolve the issue. The CFO also highlighted that the impact is likely to be stronger in the near-term which is why the deliveries may take hit in the first quarter.

Boeing wins enormous business from the Chinese airlines. With air travel demand in China having risen sharply in the past few years, China is anticipated to beat the United States as the largest air travel market across the globe later in this decade, as per International Air Transport Association.

New Challenges Are Likely To Keep Boeing Under Pressure In 2020

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Another challenge currently in the face of Boeing is the weakening demand for air cargo. In 2019, figures for air-freight demand were posted as the worst in a decade. The decline was attributed to the reduced sales ascribed to the trade tensions.

With Boeing’s most popular fuel-efficient 737 MAX jetliner remaining grounded since March 2019 after two fatal crashed that killed 346 people, Boeing’s performance in the stock market remained almost flat on average last year. At the time of writing, it is currently exchanging hands at around $345 per share that marks an around 4% gain year to date. Considering the newer challenges in its way, however, its performance in 2020 is also expected to remain under pressure.

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