Published: Sat, April 27, 2019
Worldwide | By Lisa Hogan

Boeing estimates 737 Max costs of $1 billion

Boeing estimates 737 Max costs of $1 billion

Boeing has been testing a suite of software updates created to fix the 737 Max's control issues.

DENNIS MUILENBURG: We know every person who steps aboard one of our airplanes places their trust in us, and we are committed to earning and re-earning that trust and confidence.

This evening, the company said it was too early to calculate the overall impact on its financial results for the year.

Boeing said its costs in the first quarter rose $1 billion due to its 737 Max planes being grounded.

"There is still a lot that we don't know about the Max situation", Rob Stallard of Vertical Research Partners said in a note to clients after the conference call.

However, the marked loss was partly offset by a favorable portfolio of other commercial jetliners, such as 787 airliner, with an increased production rate and orders from Lufthansa and Bamboo Airways, as well as 777X, with orders from British Airways parent company, the International Airlines Group.

Additionally, Boeing said it will pause share buybacks.

And it said it stopped buying back shares of its stock in mid-March, shortly after the 737 Max was grounded worldwide.

After submitting the request, the next step will be to conduct a certification flight with the US Federal Aviation Administration, and then the company will need to win approval from global regulators, Muilenburg said.

Reuters reported on Tuesday that Boeing told some 737 MAX owners it was targeting U.S. Federal Aviation Administration approval of its software fix as early as the third week of May and the ending of the grounding of the aircraft around mid-July as it resumes building 52 aircraft per month.

The company repurchased US$2.3 billion of its shares in the latest quarter, all of which occurred prior to mid-March.

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.

Muilenburg said he has personally flown on two of those test flights. The company brought in $22.9 billion total and $2.4 billion in earnings from operations, down 18 percent year-over-year from 2018's $2.9 billion. The company has said it's working to fix a software issue that may have contributed to the tragedies.

US top aircraft manufacturer Boeing Company said Wednesday that its revenues slipped by a slight 2 percent to 22.9 billion USA dollars in the first quarter of 2019 from 23.38 billion dollars in the same period of 2018.

While the Max's indefinite grounding drags on, Boeing's management team is focusing on conserving cash and tamping down costs.

Some analysts do see long-term risks to Boeing, however.

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