Boeing’s troubled jet derails forecast
Boeing estimates that it will spend US$1 billion to fix the 737 Max and has pulled its forecast of 2019 earnings because of uncertainty surrounding the jetliner, which remains grounded after two crashes that killed 346 people.
The estimate was disclosed Wednesday in a presentation for investors as Boeing released first-quarter financial results, which missed Wall Street expectations. A spokesman said the estimate covered higher production costs over the next several years.
Boeing did not go into great detail on the costs of fixing flight-control software that played a role in the crashes or the additional training for pilots. Still, the disclosures gave the clearest picture yet of the financial damage that the accidents are causing to the aerospace giant.
Boeing CEO Dennis Muilenburg repeated that the company is making progress on updating the Max’s software and convincing regulators to let the plane fly again.
Chicago-based Boeing Co said its previously issued full-year guidance didn’t account for 737 Max impacts. It plans to issue a new guidance at a future date.
The company also said it is suspending stock buy-backs.
Boeing reported first-quarter net earnings of US$2.15 billion, down US$328 million, or 13 per cent, from a year earlier. Revenue slid US$465 million, or two per cent, to US$22.92, on fewer deliveries of 737s.
Profit adjusted to exclude non-repeating items was US$3.16 per share. Analysts surveyed by FactSet expected US$3.19 per share on revenue of US$22.94 billion, and both of those forecasts had been reduced considerably in the past month.