Boeing reports biggest-ever loss as 737 MAX issue drags on
NEW YORK : Boeing reported its biggest loss ever yesterday as the 737 Max crisis drags on, and the company warned it could be forced to temporarily halt production of the plane if the grounding is extended much longer.
The aviation giant's troubles have been mounting since the Max was taken out of service worldwide in March following two deadly crashes that claimed 346 lives, and it already set aside nearly US$5 billion (S$7 billion) to compensate customers.
But the warning it might have to suspend production of the aircraft jolted Wall Street, prompting losses to accelerate during a late-morning conference call with Boeing executives that reinforced the cloudiness surrounding the outlook.
Getting the MAX back in the air is a "complex" multi-regulator process "that will take time to get done", Boeing chief executive Dennis Muilenburg said.
"We have a clear understanding of the work that has to be done but there is still uncertainty in the timeline."
Boeing reported a loss of US$2.9 billion for the second quarter, a huge drop from the US$2.2 billion profit posted in the same period of last year.
The loss was not surprising following last week's announcement the company had set aside US$4.9 billion after taxes to compensate airlines for cancelled flights and the delay in plane deliveries.
Meanwhile, revenues in the latest quarter tumbled 35.1 per cent to US$15.8 billion, reflecting the hit suffered due to halted deliveries of the 737 MAX, a top-selling plane.
Analysts from Cowen, an investment bank, pointed to a "strong performance" in production of Boeing's 787, another big seller, but noted the company pushed back the first flight of the 777X, a new long-haul plane under development.
The company has blamed the delay on problems with the engine, which is being built by General Electric. - AFP