Grounding of 737 MAX after two deadly crashes will cost Boeing $5 billion to date
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The world’s biggest plane-maker Boeing said company revenue will take a $4.9 billion hit in the second quarter due to the worldwide grounding of its 737 MAX jets after two fatal crashes.
That will be the biggest quarterly loss in Boeing’s history when it reports its financial results next week.
According to the company, lost sales, reduced production and the compensation payments it was expecting to hand over to date would cost the plane maker $6.6 billion.
The sum does not include any provision for lawsuits expected to be filed by the families of the victims.
Average estimates of analysts compiled by Refinitiv suggested Boeing would book a per-share profit of $1.80 for the second quarter. The charge, which comes to $8.74 a share, will wipe out the aviation giant’s profits. It would reduce revenue and pre-tax earnings by $5.6 billion in the quarter, Boeing said.
Many global airlines have grounded their fleets of 737 MAX aircraft since mid-March, following crashes in Ethiopia and Indonesia that killed 346 people.
Boeing Chief Executive Dennis Muilenburg wrote on Twitter that the company remained focused on safely returning the 737 MAX to service.
“The MAX grounding presents significant challenges for our customers, company and supply chain,” he tweeted.
We remain focused on safely returning the 737 MAX to service. The MAX grounding presents significant challenges for our customers, company and supply chain, including the financial impact recognized this quarter. https://t.co/M7lU3yekBx
— Dennis A. Muilenburg (@BoeingCEO) July 18, 2019
The US-based airplane manufacturer said it assumes the 737 MAX will return to service in the United States and other countries in autumn. Boeing also said that it had been forced to cut future services because of uncertainty over the timing of deliveries of 737 MAX planes.
An investigation into MAX crashes has revealed the majority of Boeing 737s had a non-working alert for faulty sensor data. The company scheduled the problem to be fixed three years after discovering it and didn’t inform the FAA until one of the planes crashed.
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