Boeing Co. and Airbus SE are making planes that airlines aren’t collecting, straining their finances as the coronavirus pandemic wreaks havoc on travel and the aerospace industry.
Airlines in many cases say they don’t want the aircraft for now, because they are unable to fill them profitably during a historic plunge in demand for flying. Travel restrictions are also hindering employees of some airlines from getting to the U.S. and Europe to pick up planes from factories.
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And then there were three — and this time, Boeing has been left out.
NASA has selected three US aerospace firms to design and develop human landing systems for the agency’s Artemis program, one of which will land the first woman and next man on the surface of the moon by 2024, Xinhua reported.
The three companies are Blue Origin of Kent, Washington; Dynetics of Huntsville, Alabama; and SpaceX of Hawthorne, California.
Cutting Boeing out of a key NASA spaceflight effort deals a blow to the aerospace giant’s space wing, which for decades has been a key International Space Station contractor and more recently a secondary provider in NASA’s efforts to launch humans to the station under its Commercial Crew Program, Reuters reported.
NASA said it removed Boeing and another company as bidders for the lunar lander award early on in the selection process, though a specific reason was not immediately clear.
The three companies, which include firms of tech billionaires Elon Musk and Jeff Bezos, will share US$967 million — Blue Origin’s contract is worth US$579M, SpaceX’s US$135M and Dynetics will receive US$253M, The Guardian reported.
Blue Origin proposes a three-stage lander that would abandon its landing engines on the moon’s surface to lighten the load when it is time to return to Earth. SpaceX wants to use its general purpose “Starship” spacecraft, which it says could also be used for Mars missions. Dynetics plan an innovative lander that could be launched on any rocket, The Guardian reported.
“With these contract awards, America is moving forward with the final step needed to land astronauts on the Moon by 2024, including the incredible moment when we will see the first woman set foot on the lunar surface,” said NASA Administrator Jim Bridenstine.
“This is the first time since the Apollo era that NASA has direct funding for a human landing system, and now we have companies on contract to do the work for the Artemis program,” he said.
NASA’s commercial partners will refine their lander concepts through the contract base period ending in February 2021. During that time, the agency will evaluate which of the contractors will perform initial demonstration missions, Reuters reported.
Unlike the Apollo program that put astronauts on the moon nearly 50 years ago, NASA is gearing up for a long-term presence on Earth’s satellite that the agency says will eventually enable humans to reach Mars, leaning heavily on private companies built around shared visions for space exploration.
Picking three providers allows NASA to have redundancy in case one company falls behind in development, Lisa Watson-Morgan, NASA’s human landing system program manager, told reporters on Thursday.
“I am confident in NASA’s partnership with these companies to help achieve the Artemis mission and develop the human landing system returning us to the Moon” said Watson-Morgan.
“We have a history of proven lunar technical expertise and capabilities at Marshall and across NASA that will pave the way for our efforts to quickly and safely land humans on the Moon in 2024.”
NASA says it is returning to the Moon for scientific discovery, economic benefits, and inspiration for a new generation.
Working with its partners throughout the Artemis program, the agency hopes to fine-tune precision landing technologies and develop new mobility capabilities that allow robots and crew to travel greater distances and explore new regions of the Moon.
The agency has proposed building a new habitat and rovers, testing new power systems and much more to get ready for human exploration of Mars.
“I think we’ve got the potential for an incredibly exciting future in space with a base on the moon, and ultimately sending people and having a self-sustaining city on Mars,” Musk, who also leads electric car firm Tesla, told Reuters on Thursday.
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Boeing Co. investors zeroed in on the few positives to be found in the aircraft maker’s first-quarter results, with the fact that the company didn’t use up as much cash as Wall Street feared at the top of the list.
Boeing BA, +5.86%
shares surged in premarket trading and held on to outsize gains into the Wednesday session, among the top gainers for the Dow Jones Industrial Average DJIA, +2.20%.
The stock was recently up 9%, its best in two weeks.
Earlier Wednesday, Boeing posted a net loss of $641 million, or $1.11 a share, in the quarter, contrasting with net profit of $2.15 billion, or $3.75 a share, in the year-ago period. The aircraft maker reported an adjusted loss of $1.70 a share. Revenue fell 26% to $16.91 billion.
Ahead of the report, analysts polled by FactSet had expected an adjusted loss of $1.60 on sales of $17.33 billion.
Boeing, still reeling from the world-wide grounding of its 737 Max aircraft, has struggled amid the coronavirus pandemic as travel ground to a halt and its airline customers delay or forgo plane orders. It has had to shut down plants, although it has reopened some with restrictions in place.
Not surprisingly, first quarter “was an ugly quarter for Boeing,” Vertical Research Partners analyst Robert Stallard said in a note. “We think investors were braced for an EPS loss and free cash outflow in the first quarter, but the chances are that things will get worse before they get better.”
Boeing’s free cash flow swung to a negative $4.73 billion from positive $2.29 billion, beating the FactSet consensus of negative $5.79 billion.
The free cash was “better than levels we heard investors concerned with in recent weeks,” analysts at Goldman Sachs said in a note. Moreover, Boeing said it is exploring additional sources of near-term liquidity, and that it believes it will be able to obtain it, the analysts said.
Sales from its commercial-airplane business fell 48% to $6.21 billion, topping expectations of $5.94 billion, while defense, space and security revenue declined 8% to $6.04 billion versus expectations of a rise to $6.76 billion.
Boeing’s commercial aircraft production rates are coming down about 25% on average, but are not as bad as feared, analysts at Jefferies said in their note.
For the grounded 737 Max, Boeing said it plans to resume production at a low rate this year and gradually increase it to 31 planes a month in 2021, which compares to the Jefferies estimate of ramp to production of 27 of the aircraft a month.
That expects that the planes, removed from service in March 2019 after two deadly crashes, would win back regulatory approvals in time for deliveries to resume in the third quarter, the analysts said.
Boeing has resumed operations in Washington state and South Carolina facilities, with the company saying it made modifications to ensure employee’s safety and to keep with social-distancing and cleanliness guidelines.
Shares of Boeing have lost 62% in the past 12 months and 56% over the last three months, which compares with losses of 7% and 14% for the Dow in these same periods. Boeing is a Dow component.
The company said operations at its Philadelphia plants, which manufacture military rotorcraft including the H-47 Chinook, V-22 Osprey and MH-139A Grey Wolf, would restart on Monday with enhanced safety measures.
Boeing said on Thursday it would resume the production of commercial jets next week in Washington state.
(Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva)