A third Falcon 6X recently took flight and joined Dassault Aviation’s flight test campaign, moving the new long-range extra widebody twin a step closer to anticipated certification in 2022.
Falcon 6X s/n 003 is fitted with a full interior and will be used for cabin design validation. The aircraft completed a two-hour maiden flight from Dassault’s Bordeaux-Mérignac final assembly plant to its Istres flight test facility on June 24, climbing to Flight Level 400 and accelerating to a cruise speed of Mach 0.85. The first 6X flew on March 10 and the second on April 30.
Aircraft no. 3 is outfitted with the Falcon 6X’s award winning interior, including in-flight entertainment and communications systems. In addition to testing this equipment, the aircraft will be used to evaluate environmental features and temperature control and validate cabin acoustics systems, which alongside those on the ultra long-range Falcon 8X trijet are expected to be the industry reference.
A fourth aircraft will also be equipped with a full cabin interior, currently being installed in Mérignac. It will conduct a two-month global endurance flight campaign intended to ensure that all 6X systems are fully mature upon entry into service.
Production of additional units is in full swing, with aircraft no. 10 scheduled to be on the final assembly line by beginning of July. The Falcon 6X has received several prestigious design awards, including the Red Dot prize for premium cabin design. The aircraft was recognized this month as the “Best of the Best” in aviation by the Robb Report luxury-lifestyle magazine, which noted: “Dassault’s newest aircraft pairs size with technology to create an award-worthy new class of business jet.”
Talgo has announced the timetable for the manufacture and launch of its hydrogen train, a green, innovative and efficient alternative to replacing diesel engines, which will be ready in 2023. The train will be named Talgo Vittal-One, as a reference to the place of the hydrogen in the periodic table, the first one. The details were presented during the event “Renewable hydrogen: an opportunity for Spain”, organised by the Spanish Ministry for the Ecological Transition and the Demographic challenge.
The first phase of the validation tests of the hydrogen technology will be conducted in 2021. After the validation process, the hydrogen technology will be installed in the new train during a second manufacturing phase that will take place between 2021 and 2023.
The company’s CEO, José María Oriol, stated during his presentation: “Green hydrogen is no longer the future, it is a reality. The implementation of hydrogen trains, such as the one Talgo is developing, will improve mobility in our country and have a positive impact on the environment. It will allow us to make the most of the non-electrified Spanish railways while reducing our carbon footprint”.
This system is configured as a modular solution that can be installed on all types of trains, as well as in upgrades from diesel to hydrogen. However, it has been specifically designed for the Vittal platform for Commuter and Regional trains, which Talgo has presented in the bidding process for various tenders in Spain and other countries.
Elbe Flugzeugwerke (EFW), the joint venture created by Airbus and ST Engineering has achieved key milestones in the A321 passenger-to-freighter (P2F) conversion programme with the delivery and entry-into-service on 2th October of the first converted aircraft to Qantas. This new P2F version is being leased by aircraft asset manager Vallair to Qantas, to operate services on behalf of Australia Post. Last month, following its flight tests, the newly completed aircraft had been delivered by EFW to Vallair.
These milestones mark the completion and ‘birth’ of the world’s first A321 converted freighter. EFW had received the Supplemental Type Certificate (STC) for the A321P2F from the European Union Aviation Safety Agency (EASA) in February this year, and the Validation STC from the US Federal Aviation Administration (FAA) in July. Operator-specific enhancements were subsequently incorporated into the freighter and certified prior to its delivery from EFW to Vallair.
The A321P2F is the first in its size category to offer containerised loading in both the main (up to 14 full container positions) and lower deck (up to 10 container positions). With a generous payload-range capability that can carry 28 metric tonnes over 2,300 nautical miles, the A321P2F is the ideal Single-Aisle freighter aircraft for express domestic and regional operations. The conversion features a large main cargo door which is hydraulically actuated and electrically locked, a ‘Class-E’ main-deck cargo compartment with full rigid 9g barrier for optimal protection between crew and cargo, and a redefined flight deck that includes supernumerary seats.
The collaboration between ST Engineering, Airbus and EFW is the OEM-supported conversion for A321P2F in the market. There has been a keen interest from customers in the solution, which is expected to further grow with the first A321P2F unit entering the market. Looking further ahead, next year the story is set to take another stride when the first A320P2F will take shape.
– Financial results continue to be significantly impacted by COVID-19 and the 737 MAX grounding
– Proactively managing liquidity and transforming for the future
– Revenue of $14.1 billion, GAAP loss per share of ($0.79) and core (non-GAAP)* loss per share of ($1.39)
– Operating cash flow of ($4.8) billion; cash and marketable securities of $27.1 billion
– Total backlog of $393 billion, including more than 4,300 commercial airplanes
Table 1. Summary Financial Results
Third Quarter
Nine Months
(Dollars in Millions, except per share data)
2020
2019
Change
2020
2019
Change
Revenues
$14,139
$19,980
(29)%
$42,854
$58,648
(27)%
GAAP
(Loss)/Earnings From Operations
($401)
$1,259
NM
($4,718)
$229
NM
Operating Margin
(2.8)%
6.3%
NM
(11.0)%
0.4%
NM
Net (Loss)/Earnings
($466)
$1,167
NM
($3,502)
$374
NM
(Loss)/Earnings Per Share
($0.79)
$2.05
NM
($6.10)
$0.66
NM
Operating Cash Flow
($4,819)
($2,424)
NM
($14,401)
($226)
NM
Non-GAAP*
Core Operating (Loss)/Earnings
($754)
$895
NM
($5,773)
($864)
NM
Core Operating Margin
(5.3)%
4.5%
NM
(13.5)%
(1.5)%
NM
Core (Loss)/Earnings Per Share
($1.39)
$1.45
NM
($7.88)
($1.13)
NM
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”
The Boeing Company [NYSE: BA] reported third-quarter revenue of $14.1 billion, GAAP loss per share of ($0.79) and core loss per share (non-GAAP)* of ($1.39), reflecting lower commercial deliveries and services volume primarily due to COVID-19 (Table 1). Boeing recorded operating cash flow of ($4.8) billion.
“The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” said Boeing President and Chief Executive Officer Dave Calhoun. “Our diverse portfolio, including our government services, defense and space programs, continues to provide some stability for us as we adapt and rebuild for the other side of the pandemic. We remain focused on the health and safety of our employees and their communities. I’m proud of the dedication and commitment our teams have demonstrated as they continued to deliver for our customers in this challenging environment. Despite the near-term headwinds, we remain confident in our long term future and are focused on sustaining critical investments in our business and the meaningful actions we are taking to strengthen our safety culture, improve transparency and rebuild trust.”
Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737 MAX, including rigorous certification and validation flights conducted by the U.S. Federal Aviation Administration, Transport Canada and the European Union Aviation Safety Agency. The Joint Operational Evaluation Board, featuring civil aviation authorities from the United States, Canada, Brazil, and the European Union, also conducted its evaluations of updated crew training. The 737 MAX has now completed around 1,400 test and check flights and more than 3,000 flight hours as it progresses through the robust and comprehensive certification process.
To adapt to the market impacts of COVID-19 and position the company for the future, Boeing continued its business transformation across five key areas including its infrastructure footprint, overhead and organizational structure, portfolio and investment mix, supply chain health and operational excellence. As the company resizes its operations to align with market realities, Boeing expects to continue lowering overall staffing levels through natural attrition as well as voluntary and involuntary workforce reductions, and recorded additional severance costs in the third quarter.
Table 2. Cash Flow
Third Quarter
Nine Months
(Millions)
2020
2019
2020
2019
Operating Cash Flow
($4,819)
($2,424)
($14,401)
($226)
Less Additions to Property, Plant & Equipment
($262)
($465)
($1,038)
($1,387)
Free Cash Flow*
($5,081)
($2,889)
($15,439)
($1,613)
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”
Operating cash flow was ($4.8) billion in the quarter, reflecting lower commercial deliveries and services volume primarily due to COVID-19, as well as timing of receipts and expenditures (Table 2).
Table 3. Cash, Marketable Securities and Debt Balances
Quarter-End
(Billions)
Q3 20
Q2 20
Cash
$10.6
$20.0
Marketable Securities1
$16.5
$12.4
Total
$27.1
$32.4
Debt Balances:
The Boeing Company, net of intercompany loans to BCC
$59.1
$59.5
Boeing Capital, including intercompany loans
$1.9
$1.9
Total Consolidated Debt
$61.0
$61.4
1Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”
Cash and investments in marketable securities decreased to $27.1 billion, compared to $32.4 billion at the beginning of the quarter, primarily driven by operating cash outflows (Table 3). Debt was $61.0 billion, down from $61.4 billion at the beginning of the quarter due to the repayment of maturing debt.
Total company backlog at quarter-end was $393 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Commercial Airplanes Deliveries
28
62
(55)%
98
301
(67)%
Revenues
$3,596
$8,249
(56)%
$11,434
$24,793
(54)%
Loss from Operations
($1,369)
($40)
NM
($6,199)
($3,813)
NM
Operating Margin
(38.1)%
(0.5)%
NM
(54.2)%
(15.4)%
NM
Commercial Airplanes third-quarter revenue decreased to $3.6 billion, reflecting lower delivery volume primarily due to COVID-19 impacts as well as 787 quality issues and associated rework. Third-quarter operating margin decreased to (38.1) percent, primarily driven by lower delivery volume, as well as $590 million of abnormal production costs related to the 737 program.
Commercial Airplanes added the final 777X flight test airplane to the test program and the GE9X engine received FAA certification. In October, the company decided it will consolidate 787 production in South Carolina in mid-2021, which did not have a significant financial impact on the program in the third quarter. Commercial Airplanes delivered 28 airplanes during the quarter, and backlog included over 4,300 airplanes valued at $313 billion.
Defense, Space & Security
Table 5. Defense, Space & Security
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Revenues
$6,848
$7,002
(2)%
$19,478
$20,168
(3)%
Earnings from Operations
$628
$754
(17)%
$1,037
$2,581
(60)%
Operating Margin
9.2%
10.8%
(1.6) Pts
5.3%
12.8%
(7.5) Pts
Defense, Space & Security third-quarter revenue decreased to $6.8 billion, primarily due to derivative aircraft award timing, partially offset by higher fighter volume (Table 5). Third-quarter operating margin decreased to 9.2 percent reflecting less favorable performance, including a $67 million KC-46A Tanker charge.
During the quarter, Defense, Space & Security received an award for eight F-15EX advanced fighter aircraft for the U.S. Air Force and a contract extension for the International Space Station for NASA, as well as contracts for nine additional MH-47G Block II Chinook helicopters for the U.S. Army Special Operations and four additional 702X satellites. Also in the quarter, the U.S. Air Force and Boeing team was awarded the Collier Trophy for aerospace excellence for the X-37B autonomous spaceplane. Significant milestones included inducting the 20th U.S. Navy F/A-18 into the Service Life Modification program as well as delivering the firstBell Boeing V-22 Osprey to Japan and the first MH-47G Block II Chinook to the U.S. Army Special Operations.
Backlog at Defense, Space & Security was $62 billion, of which 30 percent represents orders from customers outside the U.S.
Global Services
Table 6. Global Services
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Revenues
$3,694
$4,658
(21)%
$11,810
$13,820
(15)%
Earnings from Operations
$271
$673
(60)%
$307
$2,013
(85%)
Operating Margin
7.3%
14.4%
(7.1) Pts
2.6%
14.6%
(12.0) Pts
Global Services third-quarter revenue decreased to $3.7 billion, driven by lower commercial services volume due to COVID-19, partially offset by higher government services volume (Table 6). Third-quarter operating margin decreased to 7.3 percent primarily due to lower commercial services volume and additional severance costs.
During the quarter, Global Services signed an agreement with GECAS for 11 737-800 Boeing Converted Freighters, secured a six-year P-8A support contract for the Royal Australian Air Force, and was awarded F-15EX training and services support contracts by the U.S. Air Force. Global Services also delivered the first P-8A Operational Flight Trainer for the United Kingdom Royal Air Force.
Additional Financial Information
Table 7. Additional Financial Information
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
2020
2019
Revenues
Boeing Capital
$71
$66
$205
$207
Unallocated items, eliminations and other
($70)
$5
($73)
($340)
Earnings from Operations
Boeing Capital
$30
$29
$47
$86
FAS/CAS service cost adjustment
$353
$364
$1,055
$1,093
Other unallocated items and eliminations
($314)
($521)
($965)
($1,731)
Other income, net
$119
$121
$325
$334
Interest and debt expense
($643)
($203)
($1,458)
($480)
Effective tax rate
49.6%
0.8%
40.1%
(350.6)%
At quarter-end, Boeing Capital’s net portfolio balance was $2.0 billion. The change in revenue and earnings from other unallocated items and eliminations was primarily due to the timing of cost allocations. Earnings from other unallocated items and eliminations was also impacted by lower enterprise research and development expense. Interest and debt expense increased due to higher debt balances. The third quarter effective tax rate reflects tax benefits related to the five year net operating loss carryback provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act as well as the impact of pre-tax losses.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on pages 12-13.
Free Cash Flow
Free cash flow is GAAP operating cash flow reduced by capital expenditures for property, plant and equipment. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation of free cash flow to GAAP operating cash flow.
Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) the COVID-19 pandemic and related government actions, including with respect to our operations, our liquidity, the health of our customers and suppliers, and future demand for our products and services; (2) the 737 MAX, including the timing and conditions of 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, and increased considerations to customers and suppliers, (3) general conditions in the economy and our industry, including those due to regulatory changes; (4) our reliance on our commercial airline customers; (5) the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (6) changing budget and appropriation levels and acquisition priorities of the U.S. government; (7) our dependence on U.S. government contracts; (8) our reliance on fixed-price contracts; (9) our reliance on cost-type contracts; (10) uncertainties concerning contracts that include in-orbit incentive payments; (11) our dependence on our subcontractors and suppliers, as well as the availability of raw materials; (12) changes in accounting estimates; (13) changes in the competitive landscape in our markets; (14) our non-U.S. operations, including sales to non-U.S. customers; (15) threats to the security of our or our customers’ information; (16) potential adverse developments in new or pending litigation and/or government investigations; (17) customer and aircraft concentration in our customer financing portfolio; (18) changes in our ability to obtain debt financing on commercially reasonable terms and at competitive rates; (19) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (20) the adequacy of our insurance coverage to cover significant risk exposures; (21) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (22) work stoppages or other labor disruptions; (23) substantial pension and other postretirement benefit obligations; and (24) potential environmental liabilities.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Alstom has launched the validation test campaign for the Prima T8 AZ8A freight locomotives in Azerbaijan on the main freight transit line, which has recently been converted from 3kV DC to 25kV AC.
In 2014, ADY awarded a contract to EKZ, Alstom’s joint venture with Transmashholding (TMH), for a total 50 electric locomotives, including 40 Prima T8 AZ8A heavy freight locomotives and 10 Prima M4 AZ4A passenger locomotives.
The Prima T8 AZ8A is based on the KZ8A locomotives currently in service in Kazakhstan and ADY’s specific technical requirements and is compliant with GOST[1] standards and specifications.
Alstom’s Prima T8 is one of the most powerful electric locomotives in the world. This model is a 25 tons per axle two-section freight locomotive capable of towing up to 9,000 tons and running at 120 km/h, with installed continuous power of 8.8 Megawatts. The AZ8A is designed to operate in temperatures ranging from -25°C to 50°C. It requires minimum maintenance and provides high reliability levels and low lifecycle costs thanks to its modular design.
Alstom’s Prima range is covering all market segments of locomotives from heavy-haul, freight and passenger operation and shunting or trackwork operation. Over the past 20 years, more than 3,200 Prima locomotives (more than 4,600 sections) have been sold worldwide.
Alstom is present in Western & Central Asia with more than 850 people, three country offices, four depots, repair center and two plants, EKZ in Nur-Sultan for electric locomotives manufacturing and maintenance and production of on-board transformers, and KEP in Almaty to produce point machines. Alstom is a major contributor to the revitalization of country’s mobility industry and the development of its economy.
EKZ, a joint venture between Alstom and TMH[2], employs 700 people and is working on supplying and maintaining the Prima electric locomotives ordered by KTZ, Kazakhstan’s national railway company and export markets, like Azerbaijan.
[1] GOST: Commonwealth of Independent States (CIS) technical certification organisation
Alstom will provide new cars for service to the enlarged Line E of Buenos Aires City metro, which represent a notable improvement for the metro cars of this line and an increase in passengers comfort.
The modernized cars of the series 100 produced by Alstom are incorporated into this line in which around more than 100,000 passengers travel per day, from the Plaza de los Virreyes station to Retiro in the centre of Buenos Aires. This modernization is in addition to the installation and validation of the signalling system in the three new stations of the E Line, completed successfully at the beginning of June.
Those metro cars are subject to a general review after 15 years to ensure their safety and efficiency. This “half-life” maintenance includes the disassembly, polishing, cleaning, profiling and painting or absolute replacement of all cars pieces and parts that are sent to Los Hornos workshop, in Las Plata. In that, full repair and maintenance’s are done by fifty professionals and workers, mostly from the same city, who works daily in the renovation of the cars that are part of the Buenos Aires metro network.
“The modernization of these series 100 cars for Line E is another proof of the enormous efforts that Alstom makes daily in its factory of Los Hornos to improve the travel´s quality of the thousands of users of the Buenos Aires city metro. To this we must add the activities that we have carried out recently in the expansion of Line E, with the incorporation of our state-of-the-art signalling system. We are proud of our customer’s trust in our experience, and we continue to bet on transforming the Argentine transport system” says Ernesto Garberoglio, General Director of Alstom Argentina.
Alstom has been present in Argentina since 1993, maintaining its presence over the years, which demonstrates a strong commitment to the country and its inhabitants. Dedicated to the transport sector on rails, it provides products and services to the metro operator of the City of Buenos Aires (Metrovías) and to the owner of the metro infrastructure (SBASE). It also has projects with Argentine Railways Infrastructure (formerly ADIFSE) and with the Railway Operator State’s Society (SOFSE) in the implementation of technological solutions for passenger and commercial transport.
