Boeing takes $4.9 billion charge related to 737 MAX
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FILE PHOTO: The company logo for Boeing is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 11, 2019. REUTERS/Brendan McDermid
SEATTLE (Reuters) – Boeing said on Thursday it would take an after-tax charge of $4.9 billion in the second quarter related to estimated disruptions from the grounding of its 737 MAX after two deadly crashes.
The charge will result in a $5.6 billion reduction in revenue and pre-tax earnings in the second quarter, the world’s largest planemaker said in a statement.
Chicago-based Boeing is set to release financial results on July 24.
Boeing is facing one of the worst crises in its history as its best-selling jetliner, the 737 MAX, remains grounded after crashes in Ethiopia and Indonesia that together killed 346 people in the span of five months.
“We are taking appropriate steps to manage our liquidity and increase our balance sheet flexibility the best way possible as we are working through these challenges,” Boeing Chief Financial Officer Greg Smith said in a statement.
Boeing also said estimated costs to produce its flagship single-aisle aircraft increased by $1.7 billion in the second quarter, driven primarily by higher costs from a longer-than-expected reduction in its aircraft production rate.
Boeing reduced the number of single-aisle aircraft it produces monthly in the Seattle area from 52 to 42 following the second crash in Ethiopia while suspending deliveries of the aircraft to airlines, which cuts off fresh cash infusions and hits margins.
Boeing also said it assumes the 737 MAX return to service in the United States and other countries will begin early in the fourth quarter, though the company cautioned the exact timeline could shift as it has in recent weeks.
Reporting by Eric M. Johnson in Seattle; Editing by Susan Thomas