Boeing reported a drop in earnings and sales, as the company acknowledged that concerns over the safety of its 737 Max airplanes are taking a toll on its business.
Boeing's 737 Max 8 suffered two deadly crashes in a matter of months, the first in October in Indonesia with the death of all 189 people on board and then in Ethiopia on March 10, killing all 157 aboard. By Douglas MacMillan and Douglas MacMillan Reporter covering corporate accountability Email Bio Follow Aaron Gregg Aaron Gregg Reporter covering the defense industry and government contractors.
The souring picture for Boeing’s business shows how quickly the company’s fortunes have reversed since two deadly crashes of the 737 jet in Indonesia and Ethiopia killed 346 people. Boeing has long been prized by investors as a cash-producing machine with huge growth potential; Boeing has outperformed Wall Street earnings estimates for 11 straight quarters.
Boeing refuses to publicly commit to a timeline, saying is working on a software update for the safety problem and is now awaiting approval from regulators. But the company has yet to submit its final package of software fixes to the FAA for approval, something it said it would do by early April. Muilenburg said Wednesday that the company has completed over 135 flights totaling more than 230 hours of airtime on 737 Max jets with the updated software.
American Airlines and Southwest have both cancelled 737 Max flights through August, suggesting they are preparing for a grounding that lasts another four months. Analysts have predicted that plane deliveries may not resume until the fourth quarter.Seth Seifman, an analyst at JPMorgan, called 2019 a “lost year” for Boeing in terms of financial performance, because sales of the company’s biggest cash generator are on hold until the grounding is lifted.
“We’ve never had an airliner that has faced this level of complex uncertainty,” said Mike Boyd, an aviation industry analyst and consultant. “It involves software, hardware, politics, international relations. Boeing can do the fix, but from that point on we don’t know what’s going to happen.”Evidence is mounting that Boeing’s planes -- rather than pilot error -- played a central role in both crashes.
The company faces investigations into the 737 Max from the Justice Department’s criminal division, the Transportation Department’s inspector general and two congressional committees.Will Boeing make any changes to the way it produces or certifies new planes?
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