Boeing dives to first loss in two decades
BOeING swung to its first annual loss in more than two decades as the bill for tackling the 737 Max crisis ballooned.
the us plane maker now estimates the total cost of the 737 Max fallout will come to £14.3bn, more than double its previous forecast of around £7bn.
Around £6.4bn of this will be in payments to airlines for not delivering the jets and disrupting their flying schedules.
the company has been forced to ground the best-selling jet since last March, after a software fault caused two deadly crashes that killed 346 people.
Boeing is still not sure when the planes will return to the skies, with many airlines now planning their summer routes on the assumption it will not be back in service until later in the year. And the crisis led to former boss Dennis Muilenburg being sacked in December.
Boeing’s reputation has suffered further amid damning criticism from us politicians, who dubbed the jets ‘flying coffins’, and the release of internal emails where staff mocked lax safety procedures and described the planes as ‘ designed by clowns’ and ‘supervised by monkeys’.
New chief executive David Calhoun said: ‘We recognise we have a lot of work to do.’ He added: ‘ safety will underwrite every decision, every action and every step we take as we move forward.’
the former General electric executive who has been on Boeing’s board since 2009, also dismissed the idea of rebranding the
Max as worries are mounting that customers might not want to fly on it after the crashes in Indonesia and ethiopia.
Calhoun told CNBC: ‘I’m not going to market my way out of this. this plane will recover with the flying public when airline pilots step on it, fly it, like it, and by the way, based on all the test flights we’ve had to date, which are many, they do.’
Chicago-based Boeing booked a full-year loss of £489m in 2019, compared with a profit of £8bn the year before, on turnover of £59bn. this was a 24pc fall on the revenue in 2018. Between October and December, the final quarter of its financial year, revenue fell 37pc to £13.8bn and it lost £769m.
Boeing plans to cut production of the 787 Dreamliner – its major cash cow in the absence of the 737 Max jets – to 10 per month from 12 as of next January, amid a fall in demand from Chinese buyers.
It also took a £315m charge after its unmanned commercial spacecraft, the starliner, failed to dock at the International space station.
However, its shares climbed 2.5pc to $323 last night, as some analysts believed the Max charges would be far worse.
Peter Arment, at us investment bank Robert Baird, said: ‘Announcing all of these negative items removes major overhangs on the stock. this quarter’s kitchen- sink report is a step in the right direction.’
the 737 Max crisis meant european rival Airbus dethroned Boeing as the world’s largest plane manufacturer for the first time in eight years in 2019. Airbus delivered 863 planes in 2019, compared to Boeing’s 345.