Boeing puts cost of 737 Max crashes at $19bn as it slumps to annual loss
Boeing has put the total cost of the two deadly crashes of its 737 Max airliners at nearly $19bn (£14.6bn) and slumped to its first annual loss in more than two decades.
The US manufacturing giant lost $1bn in the fourth quarter as revenue plunged 37% after the worldwide grounding of the 737 Max. The company has suspended new deliveries of the plane in the wake of the biggest crisis in its 103-year history. Over the whole of 2019 Boeing lost $636m.
Boeing set aside a further $9.2bn to cover the costs of airlines that have cancelled thousands of Max flights and towards higher costs related to compensation – doubling its estimate of the total financial hit from the crisis to $18.6bn.
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Revenue tumbled to $17.9bn, far below Wall Street’s forecast of $21.7bn, according to a FactSet survey of analysts.
The Max was grounded last March after two crashes five months apart killed 346 people in Indonesia and Ethiopia. The crisis has left Boeing far behind rival Airbus in sales and deliveries of new jetliners, caused layoffs at suppliers, and led to the firing of chief executive Dennis Muilenburg.
“We recognise we have a lot of work to do,” said David Calhoun, Boeing’s newly installed president and CEO. Calhoun is a former General Electric and Nielsen executive who had been on Boeing’s board since 2009.
He added: “Safety will underwrite every decision, every action and every step we take as we move forward. Fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process.”
US airlines that own Max aircraft – Southwest, American and United – don’t expect it back in service until after the peak of the summer travel season. What remains to be seen is how willing passengers will be to fly on the plane.
Boeing executives were scheduled to discuss the fourth-quarter results with analysts later on Wednesday.