Boeing Co (BA.N) on Wednesday swung to its first annual loss since 1997 as 737 MAX costs approach $19 billion and indicated it would again cut production of its bigger 787 Dreamliner aircraft, currently its main source of cash, Trend reports citing Reuters.
Boeing, which has halted 737 MAX production and is immersed in compensation talks with airline customers as it battles the biggest crisis in its history, had previously estimated a more than $8 billion price tag for the MAX fallout.
The aircraft was grounded in March after two crashes that killed 346 people and deliveries remain frozen.
The Chicago-based planemaker has been updating the 737 MAX flight control system and software to address issues believed to have played a role in both crashes.
On a conference call, President and CEO David Calhoun said he believed the company could meet a goal to win regulatory approval for the planes to fly again by mid-year. Boeing had initially targeted 737 MAX approval in 2019, a timeline that proved overly optimistic and, coupled with criticism over the company’s culture, contributed to former CEO Dennis Muilenburg’s departure.
Calhoun rebuffed recent media suggestions that he was a Boeing “insider” ill-suited to introducing radical change, but acknowledged he had had a “front row seat” as a member of Boeing board for past 10 years and pledged to overhaul the company’s culture.
Costs related to the global grounding of Boeing’s once fast-selling 737 MAX reached $14.6 billion in 2019 and the planemaker warned of another $4 billion in charges in 2020 due to the expense of slowly re-starting production.
The amount does not include potential settlements or damages from more than 100 lawsuits the company is facing victims’ families in both crashes. It is also the target of a U.S. criminal investigation into matters related to the 737 MAX plane.
“I’ve got to restore trust, confidence and faith in the Boeing company,” Calhoun said on the call.
Boeing shares were 1.4% higher, as some analysts had expected an even larger charge for 737 MAX costs. The stock has lost about a quarter of its value since early March 2019.
Boeing’s core operating loss was $2.53 billion, or $2.33 per share, compared with a profit of $3.87 billion, or $5.48 per share, a year earlier.
Analysts on average expected Boeing to post earnings per share of $1.47 in the quarter, though several had predicted a loss amid a wide range of forecasts due to uncertainties over the cost of the 737 MAX crisis.
The company also booked more charges on its military tanker and space programs.