Boeing takes $4.9 billion charge for prolonged grounding of 737 MAX planes

Boeing takes $4.9 billion charge for prolonged grounding of 737 MAX planes

Boeing takes $4.9 billion charge for prolonged grounding of 737 MAX planes

That estimated expense has grown by an additional $1.7 billion, primarily because of a "longer than expected reduction in the production rate", the company said.

Boeing said Thursday it is basing its financial projections on the assumption that regulators will approve safety fixes to the 737 Max and clear the planes for commercial travel early in the fourth quarter of this year. Airlines have canceled thousands of flights late into the fall - incurring losses of hundreds of millions of dollars - while a timeline for the jet's return remains uncertain.

Boeing shares rose 2 percent in after-hours trading, which Morgan Stanley analyst Rajeev Lalwani said was a sign that investors were comfortable with the size of the charge and Boeing's production plans, disclosed less than a week before the company plans to release quarterly financial results on July 24.

The accounting charge does not include any estimate of how much the plane maker could eventually pay to the families of the 346 people who died in the crashes in Ethiopia and off the coast of Indonesia.

However, in a speech on Thursday, the U.S. transportation secretary appeared less certain that the aircraft would be cleared to fly again this year.

Southwest Airlines Co (LUV.N) joined US rivals on Thursday in cancelling more flights until early November due to the continued grounding of Boeing Co's (BA.N) 737 MAX, which has also prompted the low-priced carrier to freeze new pilot hiring.

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Tour de France Stage 12 profile - Toulouse - Bagneres-de-Bigorre
We were expecting a great performance from him tomorrow in the time trial. "It was his decision today to stop in the feed zone". When asked if Dennis had been hard to work with before, Stangelj said: "it's hard to answer this question".

"The MAX grounding presents significant challenges for our customers, company and supply chain", he tweeted.

Boeing's first-quarter profit margins were dented by $1 billion in estimated costs after it cut factory output of the narrow-body jets following the global grounding.

"We are taking appropriate steps to manage our liquidity and increase our balance sheet flexibility the best way possible as we are working through these challenges", Boeing chief financial officer Greg Smith said in a statement. "In general, we are happy to have some details". The plane's return, however, has been pushed back several times, most recently after FAA pilots found a new flaw while testing Boeing software changes in a flight simulator.

Dallas-based Southwest said on Thursday it would schedule without the 737 MAX until November 2, a decision that proactively removes about 180 daily flights from its schedule, more than the 150 daily flights it was removing through early October. FAA approval, new training for pilots - the exact nature of which hasn't been determined - and checking jets that have been parked will take several more weeks.

Boeing is still building Max jets, although at a reduced pace, but it halted deliveries of completed planes in March. Before the announcement, they fell $8.41 to end regular trading at $361.11.

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