1st Annual Loss for Boeing since 1997

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Boeing records first annual loss since 1997 as 737 MAX costs mount

BY REPORTING BY ANKIT AJMERA IN BENGALURU AND DAVID SHEPARDSON IN WASHINGTON, WRITING BY TRACY RUCINSKI REUTERS

Posted January 29, 2020 7:20 am

Boeing expects nearly $19 billion in costs related to the grounding of its 737 MAX jets, the U.S. planemaker said on Wednesday as it swung to its first annual loss since 1997 and indicated it would again cut production of its bigger 787 Dreamliner aircraft.

The Dreamliner widebody is the main source of cash for Boeing as it battles the global grounding of the smaller 737 MAX following two crashes that killed 346 people.

The MAX grounding forced the planemaker to freeze production of the aircraft and let to the ouster of former Chief Executive Officer Dennis Muilenburg.

“We recognize we have a lot of work to do,” Boeing President and CEO David Calhoun said in a statement.

Boeing shares rose 3 per cent in premarket trading, as some analysts had expected an even larger charge for 737 MAX costs.

The charge includes $8.3 billion to compensate airline customers that are canceling flights and scaling back growth plans in a hit to profits while their MAX jets remain grounded and $6.3 billion for production costs in 2019.

Boeing said it estimated another $4 billion charge in 2020 as it gradually resumes 737 MAX production at low rates.

Core operating loss was $2.53 billion, or $2.33 per share, compared with a profit of $3.87 billion, or $5.48 per share, a year earlier.

Analysts on average expected Boeing to post earnings per share of $1.47 in the quarter, though several had predicted a loss amid a wide range of forecasts due to uncertainties over the cost of the 737 MAX crisis.

Adding to Boeing‘s pain, demand for its bigger and more profitable jet — the 787 Dreamliner — has waned in the face of the U.S.-China trade war, prompting the company to cut production, hurting cash flow at a time when its debt is mounting.

Boeing, which is producing the 787 Dreamliner at 14 aircraft per month, said in October it expects to lower the production in late 2020 to 12 per month, amid a drought of orders from China.

The company now expects to further lower 787 Dreamliner production to 10 per month in early 2021.

Boeing reported negative free cash flow of $2.67 billion for the fourth quarter ended Dec. 31, compared with a positive free cash flow of $2.45 billion a year earlier.

© 2020 Reuters

For those who like to see the actual numbers: https://boeing.mediaroom.com/2020-01-29-Boeing-Reports-Fourth-Quarter-Results

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Boeing quietly unveiled a new version of the 737 Max, even though it is still grounded around the world
Will Martin Nov 25, 2019, 5:07 AM
Boeing 737 Max 10Boeing 737 Max 10
Boeing's newest jet, the 737 Max 10, which it quietly unveiled at its Renton, Washington factory last week. Boeing
Boeing quietly unveiled a new version of its troubled 737 Max aircraft on Friday, even as the plane remains grounded globally after two deadly crashes.
At a low-key ceremony at its factory in Renton, Washington, attended mainly by employees, Boeing released the 737 Max 10, the largest version of the Max yet.
The Max 10 is Boeing's competition to the Airbus A321 XLR, which was one of the stars of last week's Dubai Airshow. Airlines ordered $5.7 billion worth of the A321 XLR at the show
All 737 Max jets have been grounded around the world since March after two crashes which killed 346 people in total, and is not expected to return to flying until 2020.
Visit Business Insider's homepage for more stories. https://www.businessinsider.com/737-max-boeing-quietly-launches-max-10-new-version-2019-11
Boeing quietly unveiled the latest iteration of its troubled 737 Max aircraft on Friday, even as the plane remains grounded globally after two deadly crashes.

At a low-key ceremony at its factory in Renton, Washington, attended mainly by employees, Boeing released the 737 Max 10, the largest version of the Max yet.

The Max 10 seats a maximum of 230 passengers, around 30 more than the Max 8, the aircraft model involved in the two crashes that killed a total of 346 people.

Rather than the usual fanfare and excitement surrounding the launch of a new plane model, Boeing barely publicized the launch of the Max 10, sending only a brief press statement with a single picture of the aircraft.

It used the statement to try to focus on safety, as questions continue about the recertification of the 737 Max and its eventual return to service.

"This team's relentless focus on safety and quality shows the commitment we have to our airline customers and every person who flies on a Boeing airplane," the statement said.

It remains unclear when the 737 Max will be allowed to fly again as the Federal Aviation Administration continues to assess changes made to MCAS, the software on the Max that has been blamed for both crashes.

It is expected to return at some point in 2020, but many airlines which fly the plane have removed it from their flight schedules until at least March next year.

The unveiling of the Max 10 comes alongside continued fears from workers in the aviation industry over whether the Max will be safe once it returns to service.

Earlier in November, the head of the union representing American Airlines cabin crew implored Boeing to involve flight attendants in the process of re-certifying the 737 Max, saying that some crew are literally begging not to fly on the plane when it returns to service.

Days before, pilots for Southwest Airlines accused Boeing of "arrogance, ignorance, and greed" over the Max.

The launch of the new jet came at the end of a week when airlines put their faith strongly in the Airbus A321 XLR, a rival to the Max 10.

Airlines announced orders worth around $5.7 billion for the A321 XLR during the Dubai Airshow last week, with 40 of the planes ordered at the show.

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