Industry News From Gogo, Astronics, Boeing, Airbus and Others

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While the economy seems to be slowly picking up, recent breakouts seem to tell us that a vaccine is the most important thing that can happen – worldwide! But the question is when? Everybody is affected and passenger travel is one of the worst victims. Airlines everywhere are suffering, laying off workers and in the USA future layoffs seem inevitable. For example the following layoffs are what we are hearing if US airlines don’t get any additional funding from the US government: Alaska Airlines said they will be sending out some 1,600 notices soon (4,200 nationwide and it is reported that the majority of these numbers will be from flight attendants); United has 3,900 pilots at risk if assistance is not provided. Furthermore, not long ago they warned some 35,000+ employees of the risk of potential layoffs; and American is looking at some 25,000 furloughs as well. One big question is what the Governments will do for airlines worldwide. More importantly, if a vaccine for COVID-19 is created, how long will it take to get dispersed, and resultantly, how long will it take for the air market to return? One report predicts 2024! Air travel not expected to recover until 2024


GOGO

As part of its continued cost reduction initiatives to align the scale of its organization with current demand for aviation connectivity services, Gogo is eliminating 143 fulltime positions, predominantly from the Company’s Commercial Aviation business.

“As the pandemic continues to impact commercial airline travel, we are taking additional actions as part of our comprehensive 16-lever strategy to reduce costs. Based on our current expectations of the scope and timing of a recovery in the industry and our Commercial Aviation business, reducing our workforce has become a necessary step. We do not take this action lightly, but we believe it is critical in our efforts to preserve our financial flexibility, while maintaining the quality of our service and relationships with our customers,” said Oakleigh Thorne, Gogo’s President and CEO.

The reduction in force will take effect on August 14, 2020, and represents approximately 14% of the Company’s overall workforce. In addition to the reduction in force, Gogo will continue certain furloughs and maintain the salary reductions that were previously implemented. In keeping with the previously announced 16-lever plan to reduce costs, Gogo will continue to pursue non-personnel cost-savings levers, including renegotiating terms with suppliers, delaying aircraft equipment installations, deferring purchases of capital equipment, reducing marketing and travel expenses, and eliminating non-essential spend.


ASTRONICS

Astronics Corporation Reports 2020 Second Quarter Financial Results

  • Sales for the quarter were $123.7 million with bookings of $61.5 million
  • Net loss was $(23.6) million, after goodwill impairment charges of $12.6 million
  • Adjusted EBITDA was $9.2 million, or 7.4% of sales
  • Cash from operations was $18.3 million for the quarter, $41.5 million year-to-date

AIRBUS

AIRBUS had €1.14b net loss in 2Q20 (vs €1.2b profit in 2Q19) on 55% lower revenues; Commercial Aircraft lost €1.9b (vs €1.2b profit) on 65% lower revenues. Employment remains flat from Jan 1.

AIRBUS says commercial aircraft are now being produced at rates under new production plan announced in April; however, it is further dropping A350 rate from six to five per month for now. It adds that 145 commercial aircraft could not be delivered as scheduled in 1H20 due to COVID-19.


BOEING

The company reported second-quarter revenue of $11.8 billion, GAAP loss per share of ($4.20) and core loss per share (non-GAAP)* of ($4.79), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding (Table 1). Boeing recorded operating cash flow of ($5.3) billion.

“We remained focused on the health of our employees and communities while proactively taking action to navigate the unprecedented commercial market impacts from the COVID-19 pandemic,” said Boeing President and Chief Executive Officer Dave Calhoun. “We’re working closely with our customers, suppliers and global partners to manage the challenges to our industry, bridge to recovery and rebuild to be stronger on the other side.”

In the second quarter, Boeing restarted production operations across key sites following temporary pauses to protect its workforce and introduce rigorous new health and safety procedures. Despite the challenges, Boeing continued to deliver across key commercial, defense, space and services programs. The company also resumed early stages of production on the 737 program with a focus on safety, quality and operational excellence. Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737, including completion of FAA certification flight tests.

To align to the sharp reduction in commercial market demand in light of COVID-19, the company is taking several actions including further adjusting commercial airplane production rates and reducing employment levels. “The diversity of our balanced portfolio and our government services, defense and space programs provide some critical stability for us in the near-term as we take tough but necessary steps to adapt for new market realities,” Calhoun said. “We are taking the right action to ensure we’re well positioned for the future by strengthening our culture, improving transparency, rebuilding trust and transforming our business to become a better, more sustainable Boeing. Air travel has always proven to be resilient – and so has Boeing.”

The latest Boeing NPRM on the 737-8 and 737-9 (737 MAX) aircraft.

(Editor’s Note: Boeing had $2.4B net loss in the second quarter this year, but less than in 2019 ($2.9B in the same quarter last year) and we note they have $326B backlog. Watch for the B737 to build slower, as well, while the goal will ultimately be some 30 per month. Also, Boeing reports the 747-8 will end in 2022. Further, we expect the company to shut down production of the 787 Dreamliner in Everett because of the slow-down and move existing production to South Carolina, no doubt because of demand and reduced labor costs. Be prepared, there will be more job cuts!)

 


COMING ATTRACTION

Next week we will deliver our readers a report on an amazingly small, incredible sounding BOSE product that you might consider getting for your family as you are all staying at home during COVID-19. And, yes, if you can’t send one of your youngsters to school, you have an audio out.


OTHER

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