Boeing expects costs from 737 Max grounding to top $18-billion

Comments On The 737 Max by Boeing CEO Was Too Affirmative Explains American Airlines Pilots

Boeing expects costs from 737 Max grounding to top $18-billion

Losses amounted to $864 million, mostly related to the $4.9 billion charged the company voluntarily took due to the 737 MAX groundings shortly before it announced its second-quarter performance.

Analysts on average expected Boeing to post earnings per share of $1.47 in the quarter.

Boeing 737 Max jets sit parked in Renton, Wash.

"We recognise we have a lot of work to do", said David Calhoun, Boeing's newly installed president and CEO. "Fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process".

Boeing climbed 2.5 per cent to US$324.61 at 9:35 a.m.in NY.

The aircraft manufacturer also braced for the impact of China's deadly coronavirus, as airlines were being forced to issue refunds and cancel flights. That crash came less than five months after a Lion Air jet went down off the coast of Indonesia.

Boeing, which is producing the 787 Dreamliner at 14 aircraft per month, said in October it expects to lower the production in late 2020 to 12 per month, amid a drought of orders from China.

Boeing has reportedly lined up $12 billion in loans, but "balance sheet management" in 2020 will be an area for questions, the note said.

The Chicago-based planemaker has been updating the 737 MAX flight control system and software to address issues believed to have played a role in both crashes.

"The experience with SARS in a much earlier timeframe, and the protocols that were established, I believe, will contain this at a much faster rate than it would have otherwise contained it without that experience", Calhoun said on CNBC.

"We are focused on returning the 737 Max to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public".

"We think Calhoun is likely to choose cautious financial assumptions to avoid rolling resets that plagued prior CEO Muilenburg", von Rumohr wrote said in a report earlier this month.

Core operating loss was US$2.53 billion, or US$2.33 per share, compared with a profit of US$3.87 billion, or US$5.48 per share, a year earlier. In 2019, revenue slid 24% to $76.6 billion.

Calhoun called the messages "horrible" and criticized company leaders who didn't disclose the messages right away.

The head of the Federal Aviation Administration, Stephen Dickson, told US airline officials late last week that he was content with Boeing's progress toward getting the Max back in the year, raising the possibility that the plane could fly sooner than Boeing has estimated. The planemaker said Wednesday that it will make another cut next year to 10 a month as it deals with slowing sales and lingering effects from U.S.

Boeing has been embarrassed in recent weeks by the disclosure of years-old internal messages in which test pilots and other key employees raised safety concerns about the Max - even saying they wouldn't put their families on it - while the plane was in development and testing.

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