Boeing Reports Annual Loss Of $636m, First In More Than Two Decades

Boeing employees and guests take photos and welcome a Boeing 777X airplane returning from its inaugural flight at Boeing Field in Seattle, Washington on January 25, 2020. PHOTO: JASON REDMOND / AFP


Boeing reported its first annual loss in more than two decades on Wednesday as the lengthy grounding of the 737 MAX undercut the company’s revenues and exploded costs.

The aerospace giant reported a $1.0 billion loss in the fourth quarter and a loss of $636 million for all of 2019, the company’s first year in the red since 1997.

Newly-installed Chief Executive David Calhoun, who took the reins this month to stabilize the situation, pledged to turn the company around even as Boeing disclosed $9.2 billion in new costs connected to the MAX.

Some analysts had expected new costs twice as high, and despite the hefty charges, Boeing shares rallied early Wednesday in pre-market.

The MAX has been grounded since March following two crashes that killed 346 people which opened the doors to intense scrutiny of Boeing’s safety practices — and regulatory oversight of its productions — as well bruising congressional investigations which have revealed a troublesome culture at the aviation giant.

“We are committed to transparency and excellence in everything we do,” Calhoun said in a statement. “Safety will underwrite every decision, every action and every step we take as we move forward.”

Calhoun has been at the helm of Boeing only since January 13 after Dennis Muilenburg was ousted in December following criticism of his handling of the crisis, and immediately after damning series of internal communications were released.

Calhoun is targeting mid-2020 to win approval from aviation regulators to resume flights on the MAX, which is seen as a more realistic timeframe after Muilenburg repeatedly pushed a more optimistic schedule.

Higher cost

The grounding of the MAX dented Boeing’s earnings in multiple ways, halting deliveries of new planes to customers, a major source of revenues.

Boeing revenues in the fourth quarter plunged 36.8 percent to $17.9 billion, while revenues for all of 2019 dropped 24.3 percent to $76.6 billion.

The crisis also prompted the manufacturer to first reduce and then halt production of the MAX until the crisis is resolved.

Boeing said Wednesday the changes in the production schedule added $2.6 billion in costs connected to airplane deliveries, plus another $4 billion in “abnormal production costs” primarily in 2020 associated with the suspension of the MAX and a “gradual resumption” of production.

The company set aside $2.6 billion to compensate airlines that have been forced to cancel thousands of flights due to grounded MAX planes and undelivered aircraft.

The MAX crisis also has weighed on numerous suppliers, such as Spirit AeroSystems, which announced earlier this month that it would lay off 2,800 employees in Kansas due to the production stoppage.

And General Electric, which builds engines for the MAX, said the crisis lowered cash flow by $1.4 billion for 2019.

Boeing also announced Wednesday that it would again cut back production of the 787 Dreamliner, a top-selling plane that has supported revenues during the protracted 737 MAX grounding.

The aerospace giant plans to cut production to 10 airplanes a month in early 2021 through 2023 based on the “near-term market outlook,” Boeing said.

The company in October had dropped to 12 a month from 14 due to lower orders from China.

Boeing shares rose 2.4 percent to $324.25 in pre-market trading.


Boeing To Halt Production Of Grounded 737 Max In January

(FILES) In this file photo taken on March 27, 2019 Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington. 
Jason Redmond / AFP


Boeing said Monday it would temporarily suspend production of its globally grounded 737 MAX jets next month as safety regulators delay the aircraft’s return to the skies after two crashes.

The decision confirmed investor fears that the company’s recovery from the crisis is dragging on longer and creating more uncertainty for Boeing than executives anticipated.

Boeing’s travails since March have weighed on the US economy, holding down American manufacturing output, trade, and sales of durable goods while damaging the company’s performance on Wall Street’s benchmark Dow Jones Industrial Average.

In a statement, the company said it would continue to pay its workers despite the temporary production stoppage, but the decision immediately raised questions for the future of parts suppliers that contribute to the jets’ manufacture.

“We have previously stated that we would continually evaluate our production plans should the MAX grounding continue longer than we expected,” the company said in a statement.

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“As a result of this ongoing evaluation, we have decided to prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month.”

The company said it would focus on delivering 400 jets it has kept in storage.

Though the jets have been grounded worldwide since March following deadly crashes in Indonesia and Ethiopia, which left 346 people dead, Boeing had continued to produce 40 of the planes per month at a Renton, Washington facility.

Shares Tumble On Wall Street

Last week, US aviation regulators issued the company an unusually sharp rebuke, accusing it of pursuing an “unrealistic” timeline for the MAX’s return to service and of making public statements intended to put pressure on federal authorities.

The Federal Aviation Administration said Wednesday it could not approve the jets’ return to service before 2020, even though Boeing had long said it planned to get officials’ green light before the end of this year.

Boeing and the FAA have been under intense scrutiny for their responses to issues with the aircraft, including the flight-handling system involved in both accidents, the Maneuvering Characteristics Augmentation System, or MCAS.

“Boeing seems to have finally come to terms with the new reality that international safety regulators will not be bent to their whim, and the process of returning these planes to service is not as simple as a quick software fix,” Senator Richard Blumenthal said in a statement.

Analysts say Boeing’s prospects will remain clouded until Boeing can get the all-clear for the MAX to fly again.

“As we have throughout the 737 MAX grounding, we will keep our customers, employees and supply chain top of mind as we continue to assess appropriate actions,” the company said, adding that it will disclose financial information tied to the suspension when it releases quarterly results late next month.

Major air carriers that had purchased 737 MAX jets have repeatedly pushed back the dates on which they anticipate a return to service.

Southwest said Thursday it had reached a confidential agreement with Boeing partially compensating the airline for costs related to the grounding of the jets.

Nevertheless, the manufacturer in November unveiled an updated version of the jet, the 737 MAX 10.

Shares in Boeing fall 4.3 percent as investors anticipated Monday’s decision. They were down another 0.4 percent in after-hours trading at 2300 GMT.


Boeing Says Working With Regulators For Return Of 737 MAX

Boeing 737 airplanes are pictured on the tarmac at the Boeing Renton Factory in Renton, Washington on March 12, 2019./ AFP


Boeing said on Saturday that it was working closely with regulators to make the necessary changes to grounded 737 MAX aircraft to ensure their safe return.

The model has been grounded since March following the second of two crashes which left a combined total of 346 people dead.

“We are interacting daily with the FAA (Federal Aviation Administration)… and also with regulators around the globe” over the return of the 737 MAX, CEO of Boeing Commercial Airplanes Stan Deal told a press conference in Dubai.

“We continue to work diligently around the changes necessary for the airplane,” Deal said ahead of the Dubai Airshow, an event that opens on Sunday.

“We continue to make progress.”

The FAA, which has been widely criticised for entrusting certification of important systems of the aircraft to Boeing, has promised a thorough review before recertification.

On Tuesday, the FAA said it expected the airplane to resume flying in January, delaying its return by one month.

But on Friday, United Airlines said it had pushed back its expected date for 737 MAX aircraft to return to service, following similar announcements by rivals Southwest and American Airlines.

The US air carrier now says it expects flights to resume on March 4, 2020, two months later than previously estimated.

Boeing said this week it hoped to get regulatory approval for a return to service before the end of this year but has delayed its estimate for the resumption of commercial flights until January, to allow for pilot training.

Deal said approvals from the FAA and other regulators around the world will help set the schedule for the air-plane’s return.

He said Boeing is discussing compensation for the grounding with its customers, including low-cost flydubai, a key client for the 737 MAX.

The grounding has exceeded initial expectations as Boeing had to upgrade systems and faced questions from regulators and politicians over the plane.

The 737 MAX crisis is one of the most serious in Boeing’s 103-year history, and has already cost the company tens of billions of dollars, amid multiple investigations by US authorities and complaints from victims’ families.

737 MAX Could Be ‘Phased’ Back Into Service By Regulators – Boeing CEO

Boeing 737 airplanes are pictured on the tarmac at the Boeing Renton Factory in Renton, Washington on March 12, 2019./ AFP


Boeing’s 737 MAX could be brought back into service gradually by government regulators but is still on track to be cleared to fly again in 2019, the company’s CEO said Wednesday.

“A phased ungrounding is a possibility,” Boeing Chief Executive Dennis Muilenburg said at an investor conference in California.

The aircraft has been grounded since mid-March following two deadly crashes, but could return to the air on a staggered schedule in different countries.

TUI Profits Collapse As Boeing 737 MAX Ban Bites

A Boeing 737 MAX 9 airplane test its engines outside of the company’s factory on March 11, 2019 in Renton, Washington. Boeing’s stock dropped today after an Ethiopian Airlines flight was the second deadly crash in six months involving the Boeing 737 Max 8, the newest version of its most popular jetliner. PHOTO: Stephen Brashear/Getty Images/AFPs


European tour operator TUI reported a sharp drop in third-quarter net profit on Tuesday, blaming the continued grounding of its Boeing 737 MAX fleet and fewer summer bookings.

In the third quarter of its financial year from April to June, the global tourism group posted net profit of 21.7 million euros ($24.3 million euros), plunging 85 per cent year-on-year.

“The flight ban on the 737 MAX in March had a significant impact on earnings in the Markets and Airlines segment,” TUI said in a statement, as the group had to find replacement aircraft — costing 144 million euros over the three months.

TUI has 15 Boeing 737 MAX aircraft and had been expected to add eight more this summer.

The new model aircraft has been grounded worldwide since mid-March following two crashes that claimed 346 lives.

Hanover-based group TUI, listed on the London Stock Exchange, generated sales of 4.75 billion euros over the quarter, up four per-cent year-on-year, supported by cruises and bolt-on extras like excursions or guided tours offered at its destinations, a segment which is growing through acquisitions.

TUI said bookings have shrunk this year as holiday-makers were deterred by uncertainties over Brexit and the weather.

In part due to the Boeing 737 MAX ban, the group’s adjusted operating income declined 46 percent year-on-year to 100.9 million euros.

The group led by Fritz Joussen confirmed that it expects its operating income for the year to decline by 26 percent, compared with 1.2 billion euros last year.


Boeing To Give $100 Mn To 737 MAX Crash Victims’ Families, Communities

Employees work in the cargo hold of a Boeing 727 MAX 9 test plane outside the company’s factory, on March 14, 2019 in Renton, Washington.


Boeing announced Wednesday it would give $100 million to communities and families affected by two crashes on its 737 MAX planes that claimed 346 lives.

Describing the sum as an “initial investment” over multiple years, the company said it would work with local governments and non-profit organizations to provide “hardship and living expenses” and boost economic development in regions affected by crashes of planes operated by Ethiopian Airlines and Lion Air.

Boeing faces numerous lawsuits filed by the victims’ families, some of whom have appeared at news conferences or during congressional hearings probing the disasters.

The $100 million figure is less than the list price for several leading 737 MAX planes. Boeing said it would also match donations from employees to families and communities affected by the accidents.

“We at Boeing are sorry for the tragic loss of lives in both of these accidents and these lives lost will continue to weigh heavily on our hearts and on our minds for years to come,” said Boeing chief executive Dennis Muilenburg in a statement to the media.

“The families and loved ones of those on board have our deepest sympathies and we hope this initial outreach can help bring them comfort.”

Boeing referenced “multiple lawsuits” in an April securities filing, saying it was also cooperating with various regulatory probes.

“We cannot reasonably estimate a range of loss, if any, that may result given the ongoing status of these lawsuits, investigations, and inquiries,” the company said in the securities filing.

Boeing Must Do More Work On Proposed 737 Fix – US Regulator

RENTON, WA – MARCH 27: A Boeing 737 MAX airplane is pictured on the company’s production line on March 27, 2019 in Renton, Washington.  Stephen Brashear/Getty Images/AFP


Boeing needs to undertake additional work on its proposed fix to the 737 MAX before it can be submitted for US review, a Federal Aviation Administration official said Monday.

The FAA, signaling Boeing’s proposed changes to the anti-stall system after two deadly crashes are still not adequate, expects Boeing to submit the plan “over the coming weeks” following more work, an agency spokesman said.

“The FAA will not approve the software for installation until the agency is satisfied with the submission,” an agency spokesman said.

Embattled Boeing Unveils Fix To Flight System After Deadly Crashes

RENTON, WA – MARCH 27: A Boeing 737 MAX airplane is pictured on the company’s production line on March 27, 2019, in Renton, Washington. Stephen Brashear/Getty Images/AFP


Embattled aviation giant Boeing pledged on Wednesday to do all it can to prevent crashes like the two that killed nearly 350 people in recent months, as it unveiled a fix to the flight software of its grounded 737 MAX aircraft.

Boeing gathered hundreds of pilots and reporters to unveil the changes to the MCAS stall prevention system, which has been implicated in the tragedies in Ethiopia and Indonesia, as part of a charm offensive to restore the company’s reputation.

“We are going to do everything to make sure that accidents like this don’t happen again,” Mike Sinnett, Boeing’s vice president of product strategy, told reporters at a factory in Washington.

Meanwhile, the head of the US air safety agency faced harsh questions from senators over its relationship with and oversight of Boeing.

Dan Elwell, the acting head of the Federal Aviation Administration, defended his agency but acknowledged that as systems become more complex, the FAA’s “oversight approach needs to evolve.”

Transportation Secretary Elaine Chao and other top officials were also on the hot seat on Capitol Hill.

Boeing chief Dennis Muilenburg was not called to the Senate hearing, but is expected to testify at a later date.

Ahead of the tough questioning, the company launched a campaign to convince the flying public that it is addressing the issues with the 737 MAX, including a fix to the Maneuvering Characteristics Augmentation System (MCAS) implicated in the deadly crashes.

At the company’s massive factory in Renton, Washington, Boeing unveiled the software changes and offered reassurances.

Sinnett said it will take only about an hour to install the updates and they can begin as soon as regulators authorize the changes, which were developed “after months of testing and hundreds of hours.”

Authorization pending

The MCAS, which makes the aircraft dive in order to regain speed if it detects a stall or loss of airspeed, was developed specifically for the 737 MAX, which has a heavier engine than its predecessor, the 737 NG.

Among the changes, the MCAS will no longer repeatedly make corrections when the pilot tries to regain control, and will be automatically disconnected in the event of disagreements between the two “angle of attack” (AOA) sensors, the company said.

This is a major change because until the Ethiopian Airlines tragedy earlier this month, the MCAS was set to react to information from a single sensor and would repeatedly override pilot corrections.

The initial investigation into the Lion Air crash in Indonesia in October found that one of the AOA sensors failed but continued to transmit erroneous information to the MCAS.

Boeing also will install a warning feature — at no cost — called a “disagree light” to indicate to the pilot when the left and right AOA sensors are out of sync.

The company also is revising pilot training, including for those already certified on the 737, to provide “enhanced understanding of the 737 MAX” flight system and crew procedures.

US pilots complained after the Lion Air crash that they had not been fully briefed on the system.

‘Directly involved’

In Washington, US aviation regulators faced questions about how certification for the MAX was handled.

Lawmakers also want to know why officials did not immediately ground the aircraft after an Ethiopian Airlines 737 MAX 8 crashed shortly after takeoff near Addis Ababa on March 10, killing all 157 people onboard.

The delay has given rise to suspicions of a too-cozy relationship between regulators and the American planemaker, especially since Chinese and European authorities moved quickly to ban the planes as soon as similarities with the Lion Air crash were raised.

The FAA — which delegates some certification procedures to Boeing, including for parts of the MAX — was “directly involved” in the safety review of the MCAS, Elwell said.

“The certification process was detailed and thorough,” but “time yields more data,” he added.

A Boeing official meanwhile said there was no need to revamp a regulatory process that has “continued to lead to safer and safer airplanes.”

At a separate hearing, Chao said she was “concerned about any allegations of coziness with any company,” but noted that allowing Boeing to handle some of its own safety certifications was necessary because the FAA “can’t do it on their own.”

She said she has ordered the Transportation Department’s inspector general, Calvin Scovel, to investigate the MAX certification, and Scovel, in turn, noted various concerns with FAA inspectors and procedures.

In his prepared testimony, he called on the agency to tighten oversight of companies that self-certify.

But a Boeing official countered that wholesale changes were not needed, saying: “In general, the process has worked and continues to work, and we see no reason to overhaul the process.”


We Have ‘Full Confidence’ In 737 MAX, Says Boeing Chief

We Have 'Full Confidence' In 737 MAX, Says Boeing Chief
(FILES) In this file photo taken on December 6, 2018, Dennis Muilenburg, chairman, president and CEO of the Boeing Company, participates in a Business Roundtable discussion in Washington, DC. MARK WILSON / GETTY IMAGES NORTH AMERICA / AFP


Boeing chief Dennis Muilenburg said Wednesday that he supports the US decision to ground the company’s 737 MAX 8 aircraft after the latest deadly crash but continues to have “full confidence” in the safety of the plane.

He said he recommended to the Federal Aviation Administration that the global fleet should be suspended “out of an abundance of caution.”

The company continues its efforts “to understand the cause of the accidents in partnership with the investigators, deploy safety enhancements and help ensure this does not happen again.”

READ ALSOU.S. To Ground All Boeing 737 Max Planes

Shares in US aviation giant Boeing fell precipitously on Wednesday, dragging the Dow Jones Industrial Average lower moments after President Donald Trump announced the grounding of top-selling aircraft.

It was an erratic day as Boeing shares recovered early in the session, but lost nearly three per cent after Trump’s announcement, before regaining some ground.

It was down 1.2 per cent just after 1900 GMT at $371.20.

The stock is now down more than 12 per cent since before Sunday’s crash of an Ethiopian Airlines flight, and wiping billions off the company’s market value.

The benchmark Dow, which is heavily weighted to Boeing’s shares, fell about 100 points, but then bounced back to show a 0.3 percent gain.

The broader S&P 500 held on to earlier winnings, putting it up 0.7 per cent at 2,811.89 and the tech-heavy Nasdaq was even higher at 7,651.91.

Trump’s announcement came hours after a similar decision by Canadian authorities and made the United States among the last nations in the world to take action to ban the planes.

Sunday’s crash of Ethiopian Airlines Flight ET302 was the second in less than five months for the 737 MAX 8, bearing eerie similarities to October’s fatal Lion Air crash in Indonesia.

Anonymous reports by US pilots also showed incidents in which flight systems suddenly and inexplicably caused the aircraft to pitch downward.