Boeing warns coronavirus could hurt first quarter aircraft deliveries

Airplane fuselages bound for Boeing’s 737 Max production facility await shipment on rail sidings at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019.

Nick Oxford | Reuters

Boeing warned Wednesday that the coronavirus outbreak could hurt aircraft deliveries in the first quarter of the year, as traffic in Asia slows sharply because of the epidemic.

A day earlier, Boeing reported no new aircraft orders and said it delivered just 13 planes in January.

Largely centered in China, the new coronavirus has infected more than 45,000 people and killed at least 1,115. The World Health Organization, which recently named the virus COVID-19, declared a global health emergency on Jan. 30.

Airlines around the world, including major U.S. carriers, have suspended or cut back on China service, citing a sharp drop in demand because of the outbreak.

More than 85,000 flights to, from and within China — equal to more than a third of scheduled flights — have been canceled between Jan. 23 and Feb. 11, aviation consulting firm Cirium said Wednesday.

Boeing’s CFO, Greg Smith, told a Cowen investor conference on Wednesday that the coronavirus’s impact is something “we’re focused on” and that the company is working with Chinese customers over the issue.

“I can certainly see that impacting, as a result of the traffic, impacting some near-term, first-quarter deliveries for a lot of us,” Smith said.

Chinese airlines have been important customers for Boeing and the country’s air travel demand has grown rapidly. China is set to displace the U.S. as the world’s largest air travel market by the middle of the decade, estimates the International Air Transport Association.

Another “watch item” for Boeing that could become a long-term problem is the softening of air cargo demand. The industry last year posted the worst air freight-demand figures in a decade, as trade tensions drove down sales.

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