For the first time in decades, Boeing’s commercial airplane business lost orders over the course of an entire year, a stark example of just how much the 737 Max crisis has hurt the company.
For all of 2019, Boeing lost orders for 87 commercial airplanes, meaning it had more cancellations than new purchases, the company said Tuesday. The final tally included the cancellation of three orders in December when customers changed plans to buy 787 Dreamliners.
A Boeing spokesman said he wasn’t sure when the company last lost commercial plane orders for the year, but “it definitely has not happened in the last 30 years.”
The negative number is especially painful when compared with European rival Airbus, which logged orders for 768 new planes for 2019.
Even with 2019 being a slightly down year for Airbus, its order backlog remains a robust 7,482 commercial airplanes — an amount equal to almost 10 years worth of production. Boeing ended 2019 with a commercial airplane backlog of 5,406 planes.
In December, Boeing failed to log any 737 Max orders as airlines and aircraft leasing companies continued to steer clear of the grounded airplane. For the year, the 737 Max order book fell by 182 planes in 2019, with a hefty percentage of those cancellations due to the bankruptcy of Vietjet Air, a low-cost carrier out of Vietnam that went out of business.
By comparison, Airbus racked up orders for 654 A320 aircraft, its popular single-aisle competitor to the Max.
Boeing’s 737 Max has been grounded since mid-March of last year. Getting the plane back in service is a primary focus of new Boeing CEO Dave Calhoun.
In an email sent to all Boeing employees on Monday, Calhoun said returning the Max to service is a top priority. “We’ll get it done, and we’ll get it done right,” he wrote in his email.
When Boeing will see a rebound in orders depends largely on when the Max is recertified by the Federal Aviation Administration. Calhoun has not said when he expects that to happen, though many airlines believe there is a reasonable chance the latest version of the 737 is back in service this spring.
Southwest Airlines and American Airlines have the Max returning to their schedules in early April while United plans to resume flying the plane in early June. However, all three airlines have shifted their schedules several times since parking their 737 Max planes and readily admit their current plans could change again.
Due to the Max grounding, Boeing delivered 380 commercial airplanes in 2019, the lowest level since 2007. The number is less than half the 768 planes Airbus delivered last year, a record for the European jet-maker.
— CNBC’s Meghan Reeder contributed to this report.
WHO says coronavirus deaths could start to rise again after cases accelerated in recent weeks, shouldn’t ‘be a surprise’
Executive Director of the World Health Organization’s (WHO) emergencies program Mike Ryan speaks at a news conference on the novel coronavirus (2019-nCoV) in Geneva, Switzerland February 6, 2020.
Denis Balibouse | Reuters
It shouldn’t “be a surprise” if the global death toll from the coronavirus begins to pick up pace again as the pandemic shows signs of accelerating across the globe, World Health Organization officials said Tuesday.
For the month of June, reported Covid-19 cases across the globe have accelerated while the death toll has been falling, Dr. Mike Ryan, executive director of the WHO’s emergencies program, said at a press conference at the agency’s Geneva headquarters.
However, WHO officials warn that there’s a lag between rising cases and rising deaths. It takes weeks after contracting the virus to fall seriously ill and potentially die from the coronavirus.
“Some of this may be lag, we may see deaths start to climb again because we’ve only really experienced this rapid increase in cases over the last five to six weeks,” Ryan said. “I don’t think it should be a surprise if the deaths start to rise again. It will be very unfortunate but it may happen.”
The pandemic has shown signs of accelerating as thousands of additional cases are reported each day. Latin America “doesn’t look good” and WHO is “concerned” about North America, minus Canada, Ryan said.
“If you imagine that somewhere in April and May we were dealing with 100,000 cases a day, today we’re dealing with 200,000 cases a day, and that is not purely a result of testing,” Ryan said.
WHO Director-General Tedros Adhanom Ghebreyesus said that while global deaths have shown signs of leveling off, it doesn’t mean “it’s been a success.”
“The leveling of the number of deaths globally is because of some countries [have contained the virus], but in many countries it’s on the rise,” Tedros said.
There are many differences between countries and their reported death count and it can be difficult to compare them, said Dr. Maria Van Kerkhove, head of the WHO’s emerging diseases and zoonosis unit.
In some countries, the increase in deaths from the coronavirus could be related to outbreaks in places with vulnerable populations that tend to suffer higher fatality rates, such as nursing homes, she said. Other countries will also have to revise their death counts moving forward as more deaths are later attributed to Covid-19.
“It will take us some time to really understand mortality but, having said that, there are many things we can do now to prevent infections and by preventing infections we are ultimately preventing the opportunity for someone to advance to serious disease and death,” Kerkhove said.
This is a developing story. Please check back later for updates.
Brazil President Jair Bolsonaro tests positive for coronavirus
President of Brazil Jair Bolsonaro speaks during the sworn in ceremony for newly appointed Minister of Communications Fábio Faria amidst the coronavirus (COVID-19) pandemic at the Planalto Palace on June 17 2020 in Brasilia.
Andressa Anholete | Getty Images
Brazilian President Jair Bolsonaro tested positive for the coronavirus Tuesday, shortly after the presidential palace said he had been displaying symptoms associated with the disease.
Bolsonaro announced his diagnosis to journalists, saying he had begun feeling ill on Sunday, multiple outlets reported.
The president reportedly also confirmed that he is taking hydroxychloroquine, a malaria drug touted by President Donald Trump as a possible preventive treatment for the disease, as well as azithromycin. Neither drug has been proven to be an effective prophylactic for Covid-19.
The government confirmed to NBC News on Monday that Bolsonaro had been feeling unwell and was running a fever of 38 degrees Celsius (about 100.4 degrees Fahrenheit). Bolsonaro had been tested for the virus after his symptoms emerged, the presidential palace told NBC.
The right-wing leader, 65, has consistently downplayed the threat of the virus in recent months, describing it as nothing more than “a little flu.” He also suggested that his past as an athlete would make him immune to the worst symptoms of the disease.
Brazil has suffered one of the world’s worst outbreaks of the coronavirus, with more than 1.6 million confirmed cases of Covid-19 and over 65,000 related deaths, according to data compiled by Johns Hopkins University.
South America’s largest country is second only to the U.S. for the highest number of confirmed cases.
Last month, a judge ordered Bolsonaro to wear a face mask in public, something he has frequently failed to do. However, a separate court order later rescinded this ruling.
On Saturday, Bolsonaro was pictured alongside Todd Chapman, the U.S. ambassador to Brazil, and several others at the U.S. embassy in Brasilia.
Brazil’s Foreign Minister Ernesto Araujo posted a photo of the meeting on July 4, showing Bolsonaro, Chapman and others gathered around a table, not wearing face masks.
Bolsonaro has insisted throughout the pandemic that maintaining social distancing and avoiding public gatherings are unnecessary when it comes to tackling the spread of the virus. Instead, Bolsonaro has claimed that abiding by these guidelines will negatively impact the country’s economic recovery.
In April, Bolsonaro fired his health minister, Luiz Henrique Mandetta, who supported social distancing restrictions and had reportedly received high marks from the Brazilian people for his handling of the pandemic.
The president had in March tested negative for Covid-19 after his press secretary, Fabio Wajngarten, was diagnosed with the virus. Days earlier, Wajngarten, Bolsonaro and other Brazilian officials had traveled to Trump‘s Mar-a-Lago resort in Palm Beach, Florida, where an Instagram photo showed them dining in close proximity.
Trump and Vice President Mike Pence, who also attended that gathering, were not immediately tested after Wajngarten’s diagnosis was revealed. Trump said at the time that he was “not concerned” about his contact with the Brazilian delegation, and then-White House press secretary Stephanie Grisham said that Trump and Pence did not require testing because they “had almost no interactions” with Wajngarten.
Trump and Pence have since repeatedly tested negative for the coronavirus, according to the White House.
Bolsonaro is not the first world leader to be infected with the virus: United Kingdom Prime Minister Boris Johnson, who tested positive in April, suffered symptoms so severe that he was transferred to an intensive care unit for multiple days.
This is a breaking news story and will be updated shortly.
Economists warn of U.K. jobs crisis ahead of crucial budget
Shoppers wearing protective face masks walk through the rain on Oxford Street in London on June 18, 2020, as some non-essential retailers reopen from their coronavirus shutdown.
Tolga Akmen/AFP/Getty Images
U.K. Chancellor of the Exchequer Rishi Sunak will deliver a fresh set of policy initiatives on Wednesday as Britain looks to spark an economic recovery from the coronavirus pandemic.
The “Summer Economic Update,” a de facto mini-budget, is expected to include tax cuts and new spending pledges in a bid to stimulate demand as the U.K. economy begins to reopen.
In his March budget, Sunak announced a £30 billion ($39 billion) spending package to tackle the immediate health and labor market impact of the pandemic and the nationwide lockdown it forced. Markets have since become accustomed to significant support announcements from the chancellor, and additional assistance from the Bank of England’s monetary policy bazooka.
However, with markets stabilized, lockdown mostly lifted and the virus seemingly under control in the country, few are expecting the kind of fiscal fireworks Sunak has delivered in the past.
“Instead, expect Sunak to announce targeted measures to lift the flagging parts of the economy and those areas that may struggle under the continued social distancing measures,” Berenberg Senior Economist Kallum Pickering said in a note Tuesday. For example, on Sunday the government announced a £1.6 billion package to support the arts sector.
The U.K. economy has contracted sharply since the beginning of the pandemic, with April’s 20.4% fall in gross domestic product the steepest monthly decline on record. Meanwhile borrowing surged to £103.7 billion ($128.9 billion) in the April-May period, meaning public sector debt surpassed GDP for the first time since 1963.
However, central to the country’s ability to weather the economic storm so far has been the furlough scheme, which has supported more than 30% of the nation’s jobs and meant that the steep drop in output has not filtered through to the labor market as yet. The program has been credited with preventing the country’s looming recession from morphing into a deep and prolonged depression.
Impending ‘jobs crisis’
Sunak has previously indicated that the furlough scheme is likely to be tapered from August and end in October, but Credit Suisse has projected that this could result in unemployment rising from 3.9% to 10%, or 3.5 million people, in the second half of the year.
In a note Monday, the bank’s economists suggested it was unlikely that the 9.3 million furloughed workers would be reabsorbed into the jobs market, with the end of furlough bringing about another wave of redundancies.
“This is because, beyond the near-term pickup, we think there is a risk that the recovery slows down as consumer caution due to the persistence of the virus and social distancing restrict domestic demand and Brexit risks weigh on sentiment” the note said.
Credit Suisse urged Sunak to either extend the furlough scheme beyond October or replace it with a scheme that subsidizes wage costs or cuts National Insurance contributions for the sectors likely to be hardest hit, like retail, travel and hospitality.
Mike Bell, global markets strategist at JPMorgan Asset Management, told reporters at a virtual roundtable Tuesday that the British economy was “propped up in a state of suspended animation” by the furlough scheme. He warned that many of the currently furloughed workers would end up unemployed once the scheme is lifted as a number of sectors struggle to recover.
“Ending the furlough scheme in October is like building a bridge that goes three quarters of the way across a river,” Bell said. He stressed that the signals of economic recovery in the U.K. do not account for the potential fall in consumer spending and economic activity, should furloughed jobs end up being lost.
Potential policy moves
Temporary National Insurance cuts are among the potential policy initiatives floated in advance of Sunak’s speech, along with subsidies for businesses hiring trainees. Other possible announcements include a temporary cut to VAT (currently at 20%), a reduction or scrapping of the property tax known as stamp duty for properties worth up to £500,000, and temporary exemptions to business property taxes.
Some newspaper reports over the weekend suggested that various initiatives could be announced on Wednesday but implemented in the Fall budget, which Berenberg’s Pickering suggested would be counterproductive, particularly in relation to the stamp duty cut.
“Rather than stimulating a housing market recovery, it would delay it by incentivizing people to wait until the tax cut before buying a house,” he said, arguing that any policies announced Wednesday should be rolled out as soon as possible.
“The risks of a policy mistake are asymmetric – with greater costs associated with doing too little rather than too much,” he added.
Berenberg estimates that U.K. output is currently around 15% below its pre-recession peak, given data points like May’s 10% rebound in retail sales and more optimistic survey data. But it does not expect GDP to return to the level seen in the fourth quarter of 2019 until early 2023.
“The uncertainty about the precise shape of the recovery, as well as continued downside risks coming from a second wave of the virus and a disorderly exit from the single market at the end of the year, justify further aggressive policy action,” Pickering added.
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