August 24, 2019

Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions

Boeing Expects a $5.6 Billion Hit for 737 Max Disruptions


Boeing said on Thursday that it would take a $5.6 billion charge in the quarter as it reels from the prolonged grounding of its 737 Max.

That figure represents Boeing’s current estimate of how much it will have to pay airlines that fly the Max, which has been grounded for months after two deadly crashes, and may not fly again this year.

Boeing also said it was anticipating an additional $1.7 billion in costs associated with the production of the Max, which has had a factory slowdown. Those costs will be spread out over years, and will depress the overall profitability of the Max program.

The new costs, which Boeing is announcing the week before it reports earnings, do not include the potential costs of litigation associated with the Max, or the $100 million fund it recently announced for families and communities affected by the two crashes.

Boeing did not specify which airlines would be receiving what compensation.

Like all big companies, Boeing has insurance policies that may cover some of these costs.

“We remain focused on safely returning the 737 Max to service,” Boeing’s chief executive, Dennis Muilenburg, said in a statement. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The Max grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”



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