October 20, 2020

The 737 MAX crisis causes Boeing’s first losses in 20 years



Immersed in the worst crisis in its history, Boeing closed 2019 with some results to forget. The Chicago-based company has announced losses of 636 million dollars, compared to the profit of 10,460 million recorded in 2018. The 737 MAX, As the American manufacturer himself has acknowledged, it is behind this negative result, the first to be recorded in 20 years. After two accidents that killed 346 people, the aircraft of this model have been on the ground since last March by order of the world air authorities. In addition, at the end of last year, Boeing decided to paralyze its production until it has completely resolved all its problems.

Revenue for the fourth quarter of the commercial division of Boeing amounted to 7.5 billion dollars and the operating margin in the same period fell to -38.1%, reflecting the decrease in deliveries of 737 and a additional provision of 2,600 million dollarss before tax relative to the estimation of possible concessions and other consideration to clients related to the temporary suspension of 737 MAX, as reported by the company. The Estimated accounting costs to manufacture the 737 increased by 2.6 billion dollars in the quarter, mainly to reflect changes in production and assumptions regarding deliveries. In addition, the production suspension of the 737 MAX and gradual resumption at lower manufacturing rates will cause abnormal production costs of about 4 billion dollars, which will be charged to expenses mainly in 2020. To cope with the delicate economic situation in which the 737 MAX has plunged it, Boeing have closed several loans with banking entities worth 13,000 million euros.

“We still have a lot to do,” said David Calhoun, president and CEO of Boeing. “We remain focused on the return of the 737 MAX to service safely, and on regaining the confidence that Boeing has enjoyed for years. We are committed to transparency and excellence in everything we do. From now on, every decision, every action and every step we take will be backed by security. Fortunately, the strength of our business portfolio provides us with the necessary liquidity to follow a thorough and disciplined recovery process, “he said. The company’s total order book totaled $ 463,000 at the end of the quarter, and includes $ 13,000 million. of new hiring dollars in the quarter.

In the last quarter of the year, Boeing delivered 79 planes, including 45 787 aircraft, and registered 30 orders of 737 MAX at the Dubai Air Show and 2 777 freighters for Lufthansa. The 787 program also registered 36 orders in the quarter. As previously announced, Boeing will reduce the production rate of 787 of the current 14 airplanes per month to 12 airplanes per month at the end of 2020. In view of the current situation and short-term market prospects, it is expected that the production rate will be further adjusted up to 10 aircraft per month in early 2021, and will return to 12 aircraft per month in 2023. The first 777X flight was completed on January 25, and the first delivery is scheduled for 2021 The Commercial Airplanes order book includes almost 5,400 aircraft worth 377,000 million dollars.

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