Boeing 737 Max troubles add up: $8B and counting

The financial fallout from the 737 Max jetliner continues to swell for Boeing, which Thursday announced $7.3 billion in costs that will hit its bottom line.

The price tag could still climb. The Max has been grounded for months after two deadly crashes, and it may not fly again this year. Airlines that flew the Max have been pushing for compensation, and Boeing has had to slow production and halt deliveries of the jets, the company’s most popular model.

Already, the tally is substantial. Boeing will take a pretax charge of $5.6 billion in the second quarter, its current estimate of what it will take to compensate its Max-flying customers. On top of that, Boeing said it expected the production slowdown to cost a further $1.7 billion. Those costs will be spread out over years and will depress the overall profitability of the Max program.

“This is not inconsequential, even for a company the size of Boeing,” said Scott Hamilton, managing director of the Leeham Co., an aviation consultancy. “This is going to be a real mess for Boeing for another year or even two.”

The new costs, which Boeing disclosed the week before it is due to report earnings, do not include the potential price of litigation associated with the Max or the $100 million fund that it recently announced for families and communities affected by the two crashes. Boeing already announced $1 billion in costs associated with the Max’s grounding last quarter and has said more charges could be coming.

“This is a defining moment for Boeing,” the chief executive, Dennis A. Muilenburg, said in a statement. “The Max grounding presents significant headwinds, and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”