Aviation

Boeing suffers historic second-quarter loss, CEO warns 737 MAX production could halt

Christian Fleetwood

Christian Fleetwood

Boeing has warned that production of its problematic 737 MAX aircraft could come to a halt, after the company suffered its worst-ever quarterly loss.

Boeing chairman, president and CEO Dennis Muilenburg told investors on a conference call that he remains confident the grounded 737 MAX will return to service by October this year, but warned the manufacturer may have to halt production on it.

His comments came shortly after Boeing released its second-quarter results, with the company recording an historic loss in no small part due to the ongoing grounding and stagnation in production of its best-selling jet, the 737 MAX.

“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,” Muilenburg said in a statement addressing Boeing’s Q2 results for 2019.

“During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”

The world’s largest aircraft manufacturer reported a second-quarter loss of US$3.38 billion for the three months to 30 June 2019 – US$670 million higher than last year’s results.

Operating cash flow for the second quarter was at an historic low of US$600 million, which Boeing said reflected lower 737 MAX deliveries and production rate as well as timing of receipts and expenditures.

The aircraft manufacturer recorded a 54 per cent change in commercial airplane deliveries, with 90 airplanes delivered in the second quarter this year, compared to 194 this time last year.

This comes as a result of the ongoing grounding of its 737 MAX – its highest-selling jet to date – in place since March, which has played a significant part in a commercial loss for the manufacturer of more than US$3 billion this quarter.

It reported overall revenue for the quarter at US$15.8 billion – around US$8.5 billion lower than this time last year – and a drop in free cash flow of around US$3 billion, reflecting lower 737 MAX deliveries.

“Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new [financial] guidance will be issued at a future date,” Boeing wrote in a statement.

Reuters reported that Boeing has held weekly technical calls and a number of conferences with MAX operators around the world and more than 200 sessions in flight simulators testing its software.

Since the grounding of the 737 MAX in March, after two fatal flight accidents that resulted in the combined deaths of 346 people, Boeing has slowed production on the jet to 42 planes per month.

Boeing is currently seeking Federal Aviation Administration (FAA) approval for a software update to the jet’s Manoeuvring Characteristics Augmentation System (MCAS), which was linked to the crash of both Lion Air Flight 610 and Ethiopian Airlines Flight 302.


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