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Travel industry news

24 Jul 2019

BY James Chapple

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Boeing posts massive second-quarter loss after 737 Max grounding

Boeing has posted a massive second-quarter (Q2) loss following the grounding of its 737 Max aircraft.

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Boeing posts massive second-quarter loss after 737 Max grounding

The aircraft manufacturer’s accounts have swung more than $5 billion in the 12 months to 30 June from a $2.2 billion net profit to a $2.94 billion net loss, while revenues are down $8.5 billion from $24.3 billion to $15.8 billion.


The Max was grounded in March following a second fatal crash in just five months, claiming 346 lives in total.


Dozens of airlines have been forced to adjust their schedules or put their expansion plans on hold as a result of the tragedies, pending a software fix from Boeing.


Last week, Southwest Airlines became the latest US carrier to further revise back its 737 Max schedule following similar moves by United and American.


Ryanair, meanwhile, has said it doesn’t now expect to take delivery of the first of its new Maxs until the New Year, which will likely result in the budget carrier cutting or closing some bases.


Boeing pre-empted its eye-watering Q2 results announcement last week, warning of a likely $5 billion hit arising from the 737 Max situation.


“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,” said Boeing chairman, president and chief executive Dennis Muilenburg.


“During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”


Boeing was boosted last month by a non-binding order from British Airways owner IAG for 200 Maxs, which are due for delivery from 2023.


And despite some cancellations and adjustments to its Max orders, Boeing still has more than 5,500 aircraft on its order book worth $474 billion, $390 billion of which arises specifically from commercial aircraft orders.


However, its commercial aircraft division nonetheless delivered a Q2 operating loss of nearly $5 billion against a profit of $1.76 billion 12 months ago.


Boeing could also face further financial headwinds from its 777X program. While it is still targeting late 2020 for delivery of its first 777X, Boeing said there was “significant risk to this schedule given engine challenges, which are delaying first flight until early 2020”.

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