Boeing reports $3B loss due to 737 MAX groundings

Boeing Co reported a nearly $3 billion second-quarter loss on Wednesday as the world’s largest planemaker struggles with the prolonged grounding of its best-selling 737 MAX jet, sending its shares down 1 per cent in premarket trading.

The aircraft manufacturer has been unable to deliver any 737 MAX aircraft since the single-aisle plane was grounded worldwide in March after two fatal crashes in Ethiopia and Indonesia killed 346 people in a span of five months.

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

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.

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“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.

Investors on a conference call later on Wednesday morning will be eager for information on how Boeing plans to increase production, repair its image with the flying public and stem its loses, as well as more details on General Electric Co engine delays on the 777X widebody program.

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.

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Initially, the 777-9 was scheduled for a first flight in the fourth quarter of 2018 with delivery to the first customer in the second quarter of 2020, according to a Boeing certification plan seen by Reuters.

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.

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The company said it would issue a new 2019 outlook at a future date, as the current forecast, which was suspended in April following the two deadly crashes, does not reflect the recent charges.

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.

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