Northwest Arkansas Democrat-Gazette
Boeing says work to fix 737 Max nearly finished
DALLAS — Boeing signaled Wednesday that it is close to completing its fix of the 737 Max and still expects the plane to be approved to fly before the end of the year.
The plane has been a drag on the company each day it remains grounded after two fatal crashes. Boeing reported that third-quarter earnings fell 51% to $1.17 billion. The company added another $900 million in costs for the Max, and deliveries of new
planes tumbled from a year ago.
Executives say the company has been giving regulators the critical final documents that describe software changes and a program for training pilots to fly the plane, which has been grounded since March.
U.S. airlines still don’t expect to use their Max jets until early next year, however, and Boeing acknowledges that other countries might take longer than the U.S. to let the plane fly again.
Chicago-based Boeing eased concern that it might even temporarily shut down the Max assembly line near Seattle if the plane remains grounded.
The company said it will raise 737 production from 42 a month to 57 a month by late next year.
The company’s timetable for bringing back the Max, after the two crashes killed 346 people, has repeatedly proved too optimistic. A few weeks ago, Chief Executive Officer Dennis Muilenburg was predicting that the plane would be flying by about October.
Besides the crisis surrounding the 737 Max, which suffered its first crash a year ago this month, Boeing reported setbacks with two larger planes.
Boeing cited uncertainty around global trade in saying that it will cut monthly production of the larger 787 jet from 14 a month to 12 for about two years, starting later this year. Last month, Muilenburg warned that U.S. trade tensions with China — the company’s biggest foreign market — threatened sales of wide-body planes like the 787.
And Boeing said it now aims to begin delivering the newest version of its big 777 airliner in early 2021. Problems with engines made by General Electric have delayed test flights for the 777X.
Boeing has completed work on software changes to a flightcontrol system called the Maneuvering Characteristics Augmentation System, which activated mistakenly and pushed down the noses of the planes that crashed in Indonesia in October 2018 and in Ethiopia in March. The company is still working on a separate issue involving flight computers.
On a call with analysts and reporters, Muilenburg said Boeing began submitting key elements of its fix to the Federal
Aviation Administration in September.
“We are diving deep into the documents, we are answering all the questions, and the FAA is taking the time to make sure we get it right,” he said.
The next major step is scheduling a certification flight with the FAA. Executives gave no estimate for when that might occur.
Muilenburg is scheduled to appear next week before Senate and House committees that are investigating Boeing and the FAA’s approval of the Max.
“I anticipate that there will be tough questions, challenging questions, a lot of scrutiny, and frankly we support the scrutiny on the work we’re doing,” Muilenburg said. He added that he hopes to express his sympathies to families of the crash victims, some of whom plan to attend the hearings.
Boeing’s third-quarter net income fell to $1.17 billion from $2.63 billion a year earlier. Pershare
earnings were $1.45 after excluding nonrecurring items, which was far short of the $2.04 Wall Street was expecting, according to a poll by Zacks Investment Research.
Revenue was $19.98 billion, which was better than analysts expected but 21% lower than the same quarter in 2018. Deliveries of commercial planes plunged to 62 in the third quarter from 190 a year earlier.
Without taking in money from deliveries of the 737, Boeing is hemorrhaging cash — free cash flow went from $4.1 billion a year ago to a negative $2.9 billion, and the company has taken on $5.5 billion in new debt.
On Tuesday, Boeing announced it was replacing the executive in charge of the commercial airplanes business, Kevin McAllister.
The company didn’t give a reason for the move, but McAllister’s division has been rocked by the ongoing grounding of the Max, unexpected structural cracks in dozens of older 737s, a failed safety test for the 777X that is in development, and tepid sales of the 787 Dreamliner.
Canaccord Genuity analyst Ken Herbert said that while the Max gets all the attention, investors have grown increasingly worried about the other Boeing planes and other problems.
Earlier this month, the company board stripped Muilenburg of his other role as chairman.
Shares of Boeing Co. rose $3.50, or 1%, to $340.50 in trading Wednesday.