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Boeing uncertain how 737 crashes will hit profits

Boeing uncertain how 737 crashes will hit profits

Aviation giant Boeing has suffered a US$1 billion hit to its bottom line amid the crisis over its 737 MAX aircraft, grounded worldwide after two deadly crashes, the company said Wednesday.

Boeing CEO Dennis Muilenburg vowed that the 737 Max will be "one of the safest planes to ever fly" once the grounded airliner returns to service.

Chicago-based Boeing Co. said its previously issued full-year guidance didn't account for 737 Max 8 impacts.

Aeronautical authorities in the United States and other countries banned commercial flights on Boeing 737 MAX 8 and 9 aircraft because of concerns raised after the accidents.

Excluding certain items, Boeing said its core earnings fell to $1.99 billion, or $3.16 per share, in the quarter ended March 31 from $2.51 billion, or $3.64 per share, a year earlier.

"Boeing had little new to provide on how exactly the 737 MAX situation is likely to pan out", said Vertical Research Partners analyst Robert Stallard.

Muilenburg made the statement in response to a question by Bank of America Merril Lynch analyst Ron Epstein during the company's first quarter 2019 earnings call on Wednesday.

Additionally, Boeing said it will pause share buybacks.

The "primary focus of every conversation" United has held with Boeing (BA.N) on the Max has been about flight safety, Munoz said. "We know exactly how it was certified", he said.

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Tajer said Muilenburg, airline CEOs and regulators should show their faith in the Max 8 by flying on it too, perhaps with their families.

Boeing's numbers come as the company faces investigations the two crashes that have implicated an automated flight-control system that erroneously pushed the noses of the planes down in response to bad readings from sensors.

Shares, which were 11% down on their pre-Ethiopia crash level ahead of Wednesday trading, were 1% higher in early trading after the update - which also revealed Boeing had sped up production of its 787 Dreamliner aircraft.

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 in January projected higher earnings per share compared with previous year, based on an expected revenue jump of as much as 10 percent.

Boeing reported a total order backlog for its commercial airplane business of $399 billion, citing more than 5,600 orders. The company has said it's working to fix a software issue that may have contributed to the tragedies.

Boeing didn't break out the complete cost of its results from the 737 Max crisis, but in a presentation to investors it said it had booked a charge related to fixing the plane's problems.

To fit the Max's larger, more fuel-efficient engines, Boeing had to position the engine farther forward and up.


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