The grounding of the 737 MAX is expected to result in a charge of $4.9 billion to Boeing for the second quarter. As a reminder, the 737 MAX was involved in two accidents in less than 6 months causing the deaths of 346 passengers. A $5.6 billion reduction in revenues and pre-tax income will follow this charge.
Boeing is currently working on updating the 737 MAX and plans to return to service by the end of 2019, but remains cautious about these forecasts and points out that this date could change.
To compensate for these losses, Boeing will have to increase the production rate of the 737 from 42 per month to 57 steps per month in 2020. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the crews and passengers who fly on our aircraft. The MAX grounding presents significant obstacles, and the financial impact this quarter reflects current challenges and helps to address future financial risks,” said Dennis Muilenburg, Chairman of Boeing’s Board of Directors, yesterday.