Boeing hives off 210 orders after Jet halts operations
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FILE PHOTO: The Boeing logo is seen at their headquarters in Chicago, in this April 24, 2013 file photo. Boeing Co on April 27, 2016, reported a 9 percent drop in first-quarter profit, citing an after-tax charge from the KC-46 aerial refueling tanker it is developing for the U.S. Air Force. REUTERS/Jim young
(Reuters) – Boeing removed 210 aircraft from its order backlog to reflect concerns about customer credit quality and took an impairment at its Boeing Capital financing unit on Thursday.
The U.S. planemaker did not disclose the name of the airline involved but the move came days after India’s Jet Airways halted operations after lenders rejected a plea for emergency funds.
The order adjustment pushed Boeing net orders into negative territory up to the end of March, with a total of minus 119 net orders despite a slew of wide-body orders in Europe and Asia.
Under recent changes in accounting rules, Boeing hives off orders that do not meet its criteria for recognising revenue into a separate category, while holding onto contractual claims.
Boeing also said its Boeing Capital financing unit, which industry sources say is carrying 75 orders for Jet in addition to some 125 that the airline has on order directly, posted a first-quarter loss of $707 million for certain miscellaneous items, compared with a loss of $326 million a year earlier.
“The change in earnings from other unallocated items and eliminations is primarily due to a customer financing impairment, higher deferred compensation expense and increased enterprise research and development investment,” it said.
A Boeing spokesman declined to comment on the identity of the airline involved in the order reduction or impairment.
Reporting by Tim Hepher, Editing by Matthias Blamont