Boeing posted a fourth-quarter loss as a result of the Covid-19 pandemic and the grounding of its 737 Max jet, which dragged down its full-year earnings to the company's biggest annual loss.
Net loss for the three months ending December 31 reached $8.4 billion, a $14.65 loss per share, widening from a net loss of $1.01bn in the prior-year period, Boeing said on Wednesday. Fourth-quarter revenue fell 15 per cent year-on-year to $15.3bn.
The company posted a full-year net loss of $11.9bn, widening from $636 million in 2019. Annual revenue rose by nearly a quarter to $58.1bn.
"2020 was a year of profound societal and global disruption which significantly constrained our industry," Dave Calhoun, Boeing's president and chief executive, said. "The deep impact of the pandemic on commercial air travel, coupled with the 737 MAX grounding, challenged our results."
The Covid-19 pandemic has decimated air travel, pushing some airlines to bankruptcy or forcing them to seek government aid and delay taking delivery of jets.
Boeing also said it expects the first delivery of its 777X widebody in late 2023, marking the third delay of the jet's debut and booking a $6.5bn pre-tax charge on the programme.
Boeing now anticipates that the first 777X delivery will occur in late 2023.
"This schedule and the associated financial impact, reflect a number of factors, including an updated assessment of global certification requirements, the company's latest assessment of the pandemic on market demand, and discussions with its customers with respect to aircraft delivery timing," the company said.
Boeing also added a charge of $468m of abnormal production costs related to the 737 Max's grounding. It also took a $744m charge related to the previously announced agreement with the US Department of Justice in January that will allow the company to avoid prosecution over fraud conspiracy charges related to the 737 Max's flawed design.
In terms of its 787 Dreamliner, Boeing plans to transition its production rate to 5 per month in March 2021, at which point the 787 final assembly will be consolidated to Boeing South Carolina, it said.
Separately, the European Union Aviation Safety Agency (Easa) approved the revamped 737 Max to return to service in Europe following a 22-month ban on the jet.
"We have every confidence that the aircraft is safe, which is the precondition for giving our approval. But we will continue to monitor 737 Max operations closely as the aircraft resumes service," Easa executive director Patrick Ky said. "In parallel, and at our insistence, Boeing has also committed to work to enhance the aircraft still further in the medium term, in order to reach an even higher level of safety."
Easa mandated a package of software upgrades, electrical working rework, maintenance checks, operations manual updates and crew training which will allow the plane to fly safely in European skies following two fatal crashes of the model that killed 346 people.
Palestine and Israel - live updates
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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