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Boeing Earnings Slide After Two Deadly Crashes Boeing Earnings Slide After Two Deadly Crashes
(about 1 hour later)
Boeing’s earnings slipped in the first quarter, and the aviation giant said it would suspend its full-year forecast, as it tries to bring its best-selling 737 Max jet back to service following two deadly crashes.Boeing’s earnings slipped in the first quarter, and the aviation giant said it would suspend its full-year forecast, as it tries to bring its best-selling 737 Max jet back to service following two deadly crashes.
Boeing said on Wednesday that revenue for the period slumped 2 percent after the plane was grounded worldwide last month. The company said fewer deliveries of the aircraft pushed revenue for its commercial airplanes segment down more than $1 billion, while 737 production costs increased by $1 billion. Boeing said on Wednesday that revenue for the period fell 2 percent after the plane was grounded worldwide last month. The company said fewer deliveries of the aircraft pushed revenue for its commercial airplanes segment down more than $1 billion, while 737 production costs increased by $1 billion.
In late October, a 737 Max 8 operated by Lion Air crashed after leaving Jakarta, Indonesia, killing the plane’s 189 passengers and crew members. Five months later, on March 10, a 737 Max 8 jet operated by Ethiopian Airlines crashed minutes after takeoff, killing all 157 people aboard. Boeing is facing a barrage of lawsuits and investigations over the accidents, as well as reports of other production problems. The company’s planned software update to the anti-stall system in the 737 Max, known as MCAS, has been delayed. In late October, a 737 Max 8 operated by Lion Air crashed after leaving Jakarta, Indonesia, killing the plane’s 189 passengers and crew members. Five months later, on March 10, a 737 Max 8 jet operated by Ethiopian Airlines crashed minutes after takeoff, killing all 157 people aboard. The jets were grounded within a few days of the second crash, as similarities between the two incidents became apparent.
The company said on Wednesday that it was making “steady progress on the path to final certification” for the update, and had completed 135 test and production flights with the fix in place. It also said it was working on improved training for pilots. Boeing is also facing a barrage of lawsuits and investigations over the accidents, as well as reports of other production problems. On Wednesday, the company said it faced costs associated with pilot training as well as with its delayed software update to an anti-stall system in the 737 Max, known as MCAS.
The company said that it was making “steady progress on the path to final certification” for the update, and had completed 135 test and production flights with the fix in place.
Dennis Muilenburg, Boeing’s chief executive, said in a statement that the company was working through a “challenging time.”Dennis Muilenburg, Boeing’s chief executive, said in a statement that the company was working through a “challenging time.”
“Across the company, we are focused on safety, returning the 737 Max to service and earning and re-earning the trust and confidence of customers, regulators and the flying public,” he said.“Across the company, we are focused on safety, returning the 737 Max to service and earning and re-earning the trust and confidence of customers, regulators and the flying public,” he said.
Core earnings per share for the quarter, which ended March 31, fell 13 percent, to $3.16 from $3.64 a year earlier. Adjusted profit slipped 10 percent, to $3.75 a share from $4.15 a share.Core earnings per share for the quarter, which ended March 31, fell 13 percent, to $3.16 from $3.64 a year earlier. Adjusted profit slipped 10 percent, to $3.75 a share from $4.15 a share.
Revenue sank to $22.9 billion from nearly $23.4 billion a year earlier. It had surged to a record high $28.3 billion in the previous quarter.Revenue sank to $22.9 billion from nearly $23.4 billion a year earlier. It had surged to a record high $28.3 billion in the previous quarter.
In the commercial airplanes division, operating earnings plunged 17 percent, to $1.17 billion. Revenue fell 9 percent, or more than $1.1 billion, to $11.8 billion, as Boeing delivered fewer 737 planes. “We deeply regret the impact this has created,” Mr. Muilenburg said during a conference call with analysts on Wednesday.
Boeing’s stock rose less than 1 percent in early trading Wednesday. In the commercial airplanes division, operating earnings plunged 17 percent, to $1.17 billion. Revenue fell 9 percent, or more than $1.1 billion, to $11.8 billion. Boeing delivered 50 fewer 737 aircraft in the quarter, resulting in lower payments from customers and storage costs for the idle planes, said Greg Smith, the chief financial officer, on Wednesday’s call.
On March 13, President Trump, following safety regulators in dozens of countries, ordered 737 Max planes grounded. Southwest Airlines and American Airlines canceled all Max flights through August. Boeing’s stock rose in morning trading on Wednesday. Adjusted for dividends, it is up from a year ago, although it has slumped nearly 15 percent since hitting a new high last month.
Now, Boeing’s costs are mounting. Sales increases in its defense and services divisions buffered the effects of the 737 Max grounding. But the company paused its share buyback program, which has helped boost its popularity with investors, in mid-March.
The company has a backlog of thousands of orders for Max jets worth billions of dollars in future sales. But in the first three months of the year, it collected just 32 new orders for the plane, compared with 122 in the same period in 2018. And some analysts, like Jim Corridore of the investment research firm CFRA, remain optimistic about the company. In a research note, he said that the 737 Max could resume service in the summer.
“Overall, these earnings paint a picture of a company with strong fundamental demand going about its business and not in any danger of a liquidity or financial crisis,” he said.
Still, the impact from the grounding could linger.
The company has a backlog of thousands of orders for 737 Max jets, worth billions of dollars in future sales. But in the first three months of the year, it collected just 32 new orders for the plane, compared with 122 in the same period in 2018.
Boeing said this month that it had delivered 89 737 jets in the first quarter, down from 132 a year earlier. It also said it was scaling back production.Boeing said this month that it had delivered 89 737 jets in the first quarter, down from 132 a year earlier. It also said it was scaling back production.