Published: Wed, April 24, 2019
Global News | By Blake Casey

Global grounding of Boeing 737 Max will cost company more than $1bn

Global grounding of Boeing 737 Max will cost company more than $1bn

Boeing withdrew its full-year 2019 forecast, saying it didn't reflect the impact of the problems surrounding the 737 Max.

The results are the first since the company entered crisis mode with the March 10 crash of an Ethiopian Airlines jet, which along with an October Lion Air crash claimed 346 lives.

Abandoning its full-year financial forecasts as a outcome of the disruption, Boeing said the guidance "does not reflect the 737 Max impacts ... due to the timing and conditions surrounding the return to service of the 737 Max fleet".

Revenues dipped 2.0 per cent to $22.9 billion, due to a tumble in commercial plane revenues following the suspension of 737 MAX deliveries.

Airplane sales make up a majority of Boeing's earnings, but the firm has a number of other divisions that help can help compensate for a slowdown in demand.

A fuller picture of how Boeing plans to fix its image with the flying public and stem further financial damage will not emerge until the end of the second-quarter as 737 production cuts did not begin until mid-April.

The company is making "steady progress on the path to final certification for a software update" for the 737 Max, Muilenburg said Wednesday.

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Last week, an expert panel of the Federal Aviation Administration judged that a software fix to the Max would be "operationally suitable", and that airline pilots familiar with previous versions of the 737 won't need additional time in flight simulators to learn about the new software that is unique to the Max.

The US aerospace giant reported $2.1 billion in profits, down 13.2 percent from same period a year ago due in part to the $1 billion hit from the 737 program.

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The company provided few clues about the fate of its best selling plane and when it might fly again. Boeing's earning per share totaled the expected $3.16 from January through March, while the revenue amounted to $22.92 billion against $22.98 billion forecasted by London-based provider of financial markets data Refinitiv.

First-quarter operating cash flow declined to $2.79-billion, from $3.14-billion, missing the Wall Street's average estimate of $2.82-billion.

The company has conducted more than 135 test flights of the fix and is working with global regulators and airlines, it said in a news release.

When the market closed Tuesday, Boeing Co. shares stood 4% higher than before the first crash.

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