Boeing to reveal its financial standing since grounding of 737 MAX
The full extent of the initial financial damage that two deadly plane crashes have had on Boeing will be revealed Wednesday as the company releases its first-quarter results.
The earnings will be the first released by the company since its 737 Max jets were grounded around the world following a fatal Lion Air crash in October 2018 and a fatal Ethiopian Airlines crash in March. Almost 350 people were killed in the crashes.
The preliminary reports into both crashes identified issues with the plane’s MCAS automated anti-stall system, and the planes will remain grounded until the software fix that Boeing is worked on is approved by the Federal Aviation Administration and regulators around the world.
Airlines have cancelled flights into the summer as a result, while Boeing has reported zero new orders for the aircraft since it was grounded.
Boeing apologized for the crash and announced that it was cutting production of the 737 Max, from 52 aircraft a month to 48 causing its stock to drop almost 4%.
Barclays analyst David Strauss predicted in an April 15 report that the crisis could result in a $10 billion drag on Boeing’s finances in 2019, Bloomberg reported.
According to Bloomberg, the 737 Max was set to become Boeing’s largest source of both revenue and profit in 2019, but that is now unlikely after the crashes caused airlines to cancel existing orders and stopped ordering new 737 Max planes from the company.
Boeing is also facing lawsuits from shareholders, reports of issues with its factory processes, and calls for it to appoint an independent board chairman, as well as lawsuits from victims’ families.
The crashes also put a wider spotlight on how Boeing and federal regulators certify planes, leading to federal investigations.
Boeing CEO Dennis Muilenburg issued an apology this month, where he said that Boeing is “sorry for the lives lost” and pledged to win back flyers’ trust.
He said that the company was working to make sure that that its software update “will ensure accidents like that of Lion Air Flight 610 and Ethiopian Airlines Flight 302 never happen again.”
While Wednesday’s results are likely to reveal a significant hit to Boeing from the grounding of the 737 Max, some analysts believe that the company will bounce back in reasonably short order.
George Ferguson, an analyst for Bloomberg Intelligence told Bloomberg News that he believes Boeing will accelerate production of the 737 Max as soon as it is cleared to fly again and make up for time lost during the grounding.
“I think the most likely scenario is this airplane is flying again by the end of the third quarter, and Boeing goes hammer and tongs to get the deliveries out the door by the end of the year,” he said.
