Boeing has posted its first quarterly loss in nearly seven years. The US$234 million loss posted yesterday for Q2 2016 came on the back of write-downs totaling US$3 billion including a US$1.2 billion write-down before taxes on its 747-8 program. It also wrote down the two 787 test aircraft that it was going to re-fit for sale, while losses also came from the military KC-46 Pegasus Tanker program after problems were found during test flights. Is this the end for the 747-8? Boeing will have to make a decision at speed as investors are making-up their minds with the institutional consensus gaining that without orders, the 747-8 cannot continue to burn through cash. It is not all bad news though as revenue at Boeing was up 1% to 24.8 billion dollars for the quarter. Great rival Airbus also suffered two new write downs on its A400M and A350 programs, which may be a slight consolation for its US rival. The question remains whether Boeing will experience more deferrals in the coming months? Maybe, maybe not. But Airbus will see more, with Pegasus Airlines at the front of the queue. The Turkish airline has just taken delivery of its first A320Neo with LEAP engines, but it had tried very hard indeed to defer the delivery right up to the eleventh hour last week. Pegasus is due to take a large number of A320Neo aircraft at the same time as it is seeing demand in its home market fall through the floor. Vast swaths of Western European holiday makers are avoiding Turkey, while its domestic client base are not planning on going anywhere, save for some maybe considering defecting/becoming political refugees on a one-way ticket. The Turkish government is continuing its cull of the middle classes this week with estimates of around 48,000 people now either suspended from work or removed from their posts altogether – those are likely to be conservative figures say the leading US and EU news agencies as this only includes government owned/run agencies, which includes THY. We reported here on the loss of most of the THY finance team as part of the government cull in Turkey a few days ago including most of the finance team with CFO Coşkun Kılıç replaced by Murat Şeker. Duygu İnceöz from investor relations is gone and Enis Feyzioglu, head of finance, is gone. Those personnel losses might actually inspire many banks and lessors to want to deal with THY and it is likely that THY will receive more interest from RFPs than previously would have been the case. Pegasus Airlines is the bellwether to watch for Turkish aviation growth.
Loss for Boeing; Pegasus A320neo delivers
