Freefall: Boeing makes $3.4bn loss on 737 Max grounding in second quarter
Boeing this afternoon posted a $3.4bn (£2.7bn) quarterly loss, as it continues to struggle with mounting costs relating to the grounded 737 Max plane.
The massive losses come after Boeing’s surprise announcement last week that it would set aside $4.9bn (£3.9bn) to compensate airlines for the disruption caused by the jet’s grounding.
Read more: Boeing takes $4.9bn hit on 737 Max groundings to compensate airlines
In March, global aviation authorities put a temporary ban on the 737 Max flying after the second of two deadly crashes which killed 346 people overall.
The figures
Boeing’s $3.4bn loss for the second quarter of 2019 comes after a $2.7bn profit in the same period last year.
Revenue was $15.8bn, down 35 per cent on last year’s $24.3bn.
The company finds itself at a $590m cash deficit at the end of the quarter, after having a $4.7bn cash position at the same time last year.
Meanwhile, for the first half of the year so far Boeing reported a $1bn loss, with revenue of $38.6bn.
Why it’s interesting
The drop in revenue is mainly down to the fact Boeing has halted deliveries of the Max to airlines.
This is despite the fact it has continued producing the planes, albeit at a reduced speed. As a result of this, it has planes with a combined value of more than $30bn waiting to be delivered.
The world’s biggest plane maker remains unable to give any forward financial guidance for the rest of 2019, having suspended its previous forecast after the jet was grounded.
Boeing has made a software update for the plane, but it remains unclear when the Max will take to the skies once again.
The firm has said it hopes to get clearance from the US regulator the Federal Aviation Administration in the final quarter of this year. But in practice, it could be 2020 before the model is returned to operation.
Read more: Ryanair warns of service cuts, blaming Boeing 737 Max ban
What Boeing said
Chief executive Dennis Muilenberg said: “This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service.”
“During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”
Main image: Getty