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Boeing sees billions more in MAX costs
Published on: Saturday, July 20, 2019
By: AFP

NEW YORK: Boeing announced Thursday some $6.6 billion in additional costs because of the 737 MAX crisis, further pressuring profitability as the global grounding of the plane following two deadly crashes drags on.

Boeing said that second-quarter earnings would be hit by $4.9 billion in one-time after-tax costs to compensate airlines for disruptions and plane delivery delays due to the MAX grounding.

Profits will also be weighed down by another $1.7 billion in costs due to the 737 MAX’s lower production rate, the company said in a statement after the stock market closed.

The MAX has been grounded since mid-March following two crashes that killed 346 people, dual disasters that have tarnished Boeing’s reputation and sparked numerous lawsuits from the families of victims.

There is still no firm timetable to bring the planes back into service.

“We remain focused on safely returning the 737 MAX to service,” said Boeing 

Chief Executive Dennis Muilenburg. “This is a defining moment for Boeing.

“The MAX grounding presents significant headwinds and the financial impact recognised this quarter reflects the current challenges and helps to address future financial risks.”

Boeing also said Thursday it hopes to receive regulatory approval to return the aircraft to service early in the fourth quarter. 

But this timeline was only the company’s “best estimate” and actual timing could differ, Boeing said.

The company is due to report second-quarter earnings on July 24.

Earlier Thursday, Southwest Airlines pushed back its target date for the returning the MAX to service by about a month to November 2, saying the timeframe was “still uncertain.”

The US Federal Aviation Administration late last month identified a fresh problem with the 737 MAX during simulator testing, further clouding the outlook for the plane’s return to service.

The FAA “is following a thorough process, not a prescribed timeline, for returning the Boeing 737 MAX to passenger service,” an agency spokesman said.  “The FAA will lift the aircraft’s prohibition order when we deem it is safe to do so.”

Michel Merluzeau, an analyst at AIR Insight Research, told AFP that it would be “good news” for Boeing if the planes do return to service in the first quarter of 2020. – AFP 



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