July 20 (UPI) — The four-month grounding of Boeing’s 737 Max fleet has put a near-$5 billion dent in the aviation giant’s second quarter earnings, the company said.
Boeing said Thursday it has taken a $4.9 billion after-tax accounting charge, which contributed to an overall revenue loss of $3.6 billion. Boeing said the charge will cut its quarterly revenue and pretax profits by $5.6 billion. The company will release its official earnings report next week.
The hefty charge was a major factor in what will be Boeing’s first quarterly loss in a decade, and its largest in history. Some analysts had projected a $1.3 billion profit for Boeing in the second quarter.
The airplane maker said the cost of its airliners increased by $1.7 billion due to “longer than expected reduction in the production rate.” Boeing said it’s working with federal regulators to return the 737 Max to service.
“This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes,” Boeing CEO Dennis Muilenburg said in a statement.
“The financial impact recognized this quarter reflects the current challenges.”
Boeing said finalizing a software fix to return the Max 8 and Max 9 to service may take until September.
“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.
The Federal Aviation Administration grounded the Max fleet in March after two crashes within six months, in Indonesia and Ethiopia. The only U.S. carriers that fly the Max — American, Southwest and United — have said the planes will stay on the ground for at least several weeks. Southwest and American this week extended their groundings until at least November.