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Boeing has announced its first quarter 2019 results. Impact of the 737 MAX crisis is already noticeable. Although the indications are initial and the full cost could not be determined, the company has already suffered losses.
The company reported $22.9 billion revenue, while net profit – $2.1 billion. Boeing revealed that the first quarter performance was driven mainly by “key defense wins strong commercial widebody performance and orders, continued robust services growth, and receiving Embraer shareholder approval for the proposed strategic partnership”.
Before the fatal Ethiopian Airlines crash involving Boeing 737 MAX 8 plane, Boeing forecast to have improved results at the end of the first quarter. Nevertheless, since mid-March Boeing has been experiencing severe turbulence.
Undoubtedly, the MAX problem had the biggest impact on the results. Although the planemaker did not reveal the total cost of the crisis, Boeing estimated global grounding of MAX at approximately $1 billion.
One more point which influenced the results is the reduction of production rate of MAX aircraft from 52 to 42 per month. Despite of the grounding and halted deliveries, Boeing continues to build MAX aircraft. And here comes another issue related to additional costs for storing aircraft which could not be delivered.
However, Boeing highlighted that commercial aircraft backlog remains “healthy” with over 5,600 airplanes valued at $399 billion.
None knows when MAX will return to the sky and what quantity of aircraft will enter the service again. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new 2019 financial guidance will be issued at a future date. The previous one does not reflect 737 MAX impacts.
“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,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg.