Boeing set to take $4.9 billion Q2 charge on 737 Max grounding

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  • July 18, 2019

Boeing’s 737 Max fiasco has cast a dark shadow over the company’s reputation and is impacting the company’s financials in a major way, as well.

The Seattle aviation company announced that it will be taking a hefty $4.9 billion post-tax hit in its second quarter due to the continued grounding of the 737 Max fleet. Boeing says the charge is “in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 Max grounding and associated delivery delays.”

Boeing is set to report its Q2 earnings next week. The company’s shares were up 2% after-hours Thursday following the announcement.

“We remain focused on safely returning the 737 MAX to service,” Boeing  CEO Dennis Muilenburg said in a statement. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”

The $8.74 per share charge will undoubtedly wipe out any profits on the company’s Q2 revenue, which is expected to reach $20.27 billion.

The charge is a hefty number, but this may just be the beginning when examining the impact of this debacle on future revenues, the company’s public reputation and any changes the company needs to make to its testing processes to ensure that these catastrophic mistakes aren’t repeated.

For these current estimates, Boeing is banking on regulatory approval of the 737 Max coming in the fourth quarter of 2019, but it acknowledges that the fleet’s grounding could stretch on even longer.

Source : Boeing set to take $4.9 billion Q2 charge on 737 Max grounding