Ahead of its earnings report next week, Boeing on Thursday said it will report an after-tax charge of £3.92 billion related to its grounded 737 Max jets.
The company said in an update that the charge was related to “an estimate of potential concessions and other considerations” for its clients who have been forced to continue revising their flight schedules with no clear end in sight. The company said the charge would result in a £4.48 billion hit to revenue and pre-tax earnings for the quarter.
“We remain focused on safely returning the 737 MAX to service,” Boeing Chairman, President, and CEO Dennis Muilenburg said in a statement. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”
Boeing said that it estimated the 737 Max would return to service “early in the fourth quarter” of this year, but regulatory reviews are ongoing and it’s possible the planes could remain grounded into next year. Citing U.S. Federal Aviation Administration officials and pilot-union leaders, the Wall Street Journal reported this week that the 737 Max may not be approved for commercial flight before January 2020.
The FAA said in June that it was “following a thorough process, not a prescribed timeline, for returning the Boeing 737 Max to passenger service”, adding that it would lift the order when it determined it was safe. The agency is in the process of reviewing a software update and pilot training procedures following two separate deadly crashes that resulted in the deaths of hundreds of people.
Meanwhile, airlines with the 737 Max in their fleets – including a number of major U.S. carriers – have repeatedly been forced to cancel flights as a result of the reviews. Most recently, United Airlines said it was extending flight cancellations through the first week of November, with American Airlines following suit earlier this week.
Southwest Airlines on Thursday also announced that it was revising its flight schedule until November 2, citing an “uncertain” timeline for the 737 Max’s return to commercial service.
“The revision will proactively remove roughly 180 daily flights from our schedule out of our total peak-day schedule of more than 4,000 daily flights,” the airline said in a statement. “We offer our apologies to our customers impacted by this change, and we thank them for their continued patience.”
Featured photo: Stephen Brashear (Getty)