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Boeing and American brace for 737 MAX financial impact

April 30, 2019 Headline News No Comments Email Email


Boeing has addressed the potential impact of the Boeing 737 MAX aircraft grounding in its financial report for the first three months of the 2019 calendar year, while American Airlines says it anticipates the grounding and rising fuel costs will cost it roughly USD 1 billion in 2019.

The Boeing Company reported first-quarter revenue of USD 22.9 billion, but noted: “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, new guidance will be issued at a future date. Boeing is making steady progress on the path to final certification for a software update for the 737 MAX, with over 135 test and production flights of the software update complete.

“The company continues to work closely with global regulators and our airline partners to comprehensively test the software and finalize a robust package of training and educational resources.”

Boeing chief Dennis Muilenburg (the airline’s president, chairman and chief executive) faced shareholders over the issue for the first time today.

Speaking of the fatal Lion Air and Ethiopian Airlines crashes that led to the 737 MAX aircraft type being grounded around the world, Muilenburg was quoted as saying: “As in most accidents, there are a chain of events that occurred. It’s not correct to attribute that to any single item.”

American Airlines, world’s largest airline, says the MAX grounding is likely to cut USD 350 million from its pre-tax profit this year, but higher fuel costs from rising oil prices will have far greater impact, adding another USD 650 million to blow through the USD 1 billion mark.

American has correspondingly lowered its forecast for full-year earnings, the Dallas Morning News reported.

Boeing 737 MAX 8

American’s first quarter revenue (that’s the first quarter of the US financial year, ending 31 March 2019) totalled USD 10.6 billion, up 2% from the same period last year. Its net profit was USD 185 million, a 16% increase from a year earlier.

Written by Peter Needham



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