Thursday, 21 October 2021

Boeing reports biggest-ever loss as 737 MAX grounding drags on

Boeing 737 airplanes are pictured on the company’s production line, on March 27, 2019 in Renton, Washington. (AFP/Stephen Brashear/Getty Images)

WASHINGTON: Boeing reported its biggest loss ever as the 737 MAX crisis drags on, and the company warned it could be forced to temporarily halt production of the plane if the grounding is extended much longer.

The aviation giant’s troubles have been mounting since the MAX was taken out of service worldwide in March following two deadly crashes that claimed 346 lives, and it already set aside nearly $5 billion to compensate customers.

But the warning it might have to suspend production of the aircraft jolted Wall Street, prompting losses to accelerate during a late-morning conference call with Boeing executives that reinforced the cloudiness surrounding the outlook.

Getting the MAX back in the air is a “complex” multi-regulator process “that will take time to get done,” Boeing chief executive Dennis Muilenburg said.

“We have a clear understanding of the work that has to be done but there is still uncertainty in the timeline.”

Boeing reported a loss of $2.9 billion for the second quarter, a huge drop from the $2.2 billion profit posted in the same period of last year.

The loss was not surprising following last week’s announcement the company had set aside $4.9 billion after taxes to compensate airlines for canceled flights and the delay in plane deliveries.

Meanwhile, revenues in the latest quarter tumbled 35.1 percent to $15.8 billion, reflecting the hit suffered due to halted deliveries of the 737 MAX, a top-selling plane.

Analysts from Cowen, an investment bank, pointed to a “strong performance” in production of Boeing’s 787, another big seller, but noted the company pushed back first flight of the 777X, a new long-haul plane under development.

The company has blamed the delay on problems with the engine, which is being built by General Electric.

Adding to the confused outlook, Boeing has still not updated its full-year profit forecast after withdrawing its targets in April due to uncertainty about the MAX.

However, at the same time it boosted dividend payments in the second quarter. Compared with last year, Boeing spent $1.2 billion on dividends, up 20 percent from the year-ago period.

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