Equipment problems that played a role in two deadly plane crashes are proving to be financially calamitous for Chicago-based aerospace giant Boeing, which reported its largest-ever quarterly loss Wednesday.
The company lost $3.38 billion for the quarter on $15.7 billion revenue.
Boeing faces a reputational crisis with no end in sight, as its once-promising 737 MAX commercial jetliner remains grounded for well over four months.
It is working to fix a host of technical problems related to the plane’s flight control systems, and executives tentatively have estimated that the planes will be deemed flight-worthy early in the fourth quarter 2019.
But regulators have provided no firm timeline for when it will allow the planes to fly again, and Boeing executives emphasized their estimates could slip further depending on regulators’ decisions.
Airlines are assuming the crisis will continue late into fall, canceling hundreds of flights every day.
“We are committed to working with regulators to satisfy all of their requirements, and to ensure the safe return to service of the 737 MAX,” Boeing CEO Dennis Muilenburg told investors Wednesday.
Muilenburg said the company may have to consider temporarily shutting down its 737 MAX production, which would be an extraordinary step that would have ripple effects throughout the global aerospace industry.
The company already slowed the production rate.
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For Boeing, the financial impacts are mounting. Executives said Wednesday that they could not estimate how much the crisis would effect the company’s earnings for the year.
Last week the company reported a $5.6 billion charge needed to compensate 737 MAX customers. It faces lawsuits from family members of the 346 people who died in Indonesia and Ethiopia aboard those flights, as well as continued scrutiny from Congress.
The 737 MAX is the newest version of Boeing’s best-selling commercial jet. It was pitched as an even more reliable version of a long-trusted plane, complete with engine updates that made the plane more fuel-efficient.
However, the company added a new flight control system called the Maneuvering Characteristics Augmentation System, or MCAS, which was designed to make the plane behave as similarly as possible to past models, with minimal new training for pilots.
However, it was later discovered that the system could push the nose of the plane downward in certain rare but dangerous situations, and override pilots’ manual controls.
The FAA initially mandated a set of fixes “no later than April,” but the timeline slipped as Boeing and the FAA discovered more problems with the plane’s flight control software.
Teal Group aerospace analyst Richard Aboulafia said Boeing is doing “a decent job” managing the financial fallout of the MAX crisis given the tremendous uncertainties at play.
“It’s unclear how much guidance they can offer given how much is out of their control,” Aboulafia said. Boeing’s “track record has been that they will say one thing, and then news is broken elsewhere ... from an airline or the FAA.”