Boeing reports $3 billion loss as MAX groundings prolong

Boeing’s net loss for the quarter ended June 30 was $2.94 billion, compared with a profit of $2.20 billion, a year earlier.

Boeing reported second-quarter revenue of $15.8 billion, GAAP loss per share of ($5.21) and core loss per share (non-GAAP) of ($5.82), reflecting the previously announced 737 MAX charge (which reduced revenue by $5.6 billion and earnings by $8.74 per share) as well as lower 737 deliveries partially offset by higher defence and services volume. 

Sales slipped 35% to $15.75 billion and also came in below the average expectation of $18.55 billion, according to IBES data from Refinitiv.

Boeing recorded operating cash flow of ($0.6) billion and paid $1.2 billion of dividends.

Boeing last week disclosed a $4.9 billion charge that includes compensation the planemaker will have to pay airlines for the delayed deliveries.

The company said the previously issued 2019 financial guidance does not reflect 737 MAX impacts, due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, adding that new guidance will be issued at a future date. 

Boeing said it is working very closely with the FAA on the process they have laid out to certify the 737 MAX software update and safely return the MAX to service. Disciplined development and testing is underway and we will submit the final software package to the FAA once we have satisfied all of their certification requirements. Regulatory authorities will determine the process for certifying the MAX software and training updates as well as the timing for lifting the grounding order.

"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 officer 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."          

Operating cash flow was ($0.6) billion in the quarter, primarily reflecting lower 737 deliveries and production rate as well as timing of receipts and expenditures. During the quarter, the company paid $1.2 billion of dividends, reflecting a 20 per cent increase in dividends per share compared to the same period of the prior year.

Cash and investments in marketable securities totaled $9.6 billion, compared to $7.7 billion at the beginning of the quarter. Debt was $19.2 billion, up from $14.7 billion at the beginning of the quarter primarily due to the issuance of new debt.

Total company backlog at quarter-end remained healthy at $474 billion and included net orders of $9 billion.

Chicago-based Boeing has embarked on a campaign to restore faith in its most popular jet and has pledged to remove any risk by reprogramming the software pinpointed in both crashes as it faces pressure to convince MAX operators and global regulators that the aircraft is safe to fly again.

“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,” Boeing Chief Executive Dennis Muilenburg said on Wednesday.

Boeing said its first flight of the 777X is now delayed until early 2020 due to the engine problems announced last month, while its current plan for a first delivery to customers in late 2020 faced significant risk.

The grounding of the 737 MAX has sent shockwaves through the industry and also pushed back the launch of a new Boeing aircraft, a twin-aisle jet for the middle of the market. That jetliner, known as NMA, is not just a crucial piece in Boeing’s fight with archrival Airbus in the lucrative longer-haul market but also for the eventual development of a 737 replacement, industry sources have said.