Boeing reports a loss for 2019 of $ 636 million, first year in red since 1997
NEW YORK: Boeing reported on Wednesday its first annual loss in more than two decades, as the long grounding of the 737 MAX undermines the company's revenues and exploits costs.
The aerospace giant reported a loss of $ 1 billion in the fourth quarter and a loss of $ 636 million for all of 2019, the company's first year in red numbers since 1997.
The newly installed executive president, David Calhoun, who took the reins this month to stabilize the situation, promised to change the company even when Boeing revealed $ 9.2 billion in new costs related to the MAX.
Some analysts expected new costs twice as high, and despite heavy charges, Boeing shares recovered early Wednesday.
The MAX has been on the ground since March after two crashes that killed 346 people who opened the doors to intense scrutiny of Boeing's security practices, and regulatory oversight of their productions, as well as to congressional investigations that have revealed a problematic culture in the aviation giant.
We are committed to transparency and excellence in everything we do, Calhoun said in a statement. Security will support every decision, every action and every step we take as we move forward.
Calhoun has been at the helm of Boeing only since January 13 after Dennis Muilenburg was expelled in December after criticism for his handling of the crisis, and immediately after a series of internal communications was released.
Calhoun is aiming in mid-2020 to get approval from aviation regulators to resume flights at the MAX, which is considered a realistic time frame after Muilenburg repeatedly pressed a more optimistic schedule.
Calhoun told a news agency that he was sure the CEO could be on the current calendar, adding that we set up a schedule that we believe we can do.
MAX's grounding abolished Boeing's profits in multiple ways, stopping deliveries of new aircraft to customers, an important source of revenue.
Boeing revenues in the fourth quarter fell 36.8 percent to $ 17.9 billion, while revenues for all of 2019 fell 24.3 percent to $ 76.6 billion.
The crisis also led the manufacturer to reduce first and then stop production of the MAX until the crisis is resolved.
Boeing said Wednesday that changes in the production schedule added $ 2.6 billion in costs related to aircraft deliveries, plus another $ 4 billion in abnormal production costs primarily in 2020 associated with MAX suspension and a gradual resumption. of the production.
The company set aside $ 2.6 billion to compensate airlines that have been forced to cancel thousands of flights due to MAX and undelivered planes.
With these previously disclosed costs and expenses, the total impact on Boeing is $ 18.6 billion.
The MAX crisis has also affected numerous suppliers, such as Spirit AeroSystems, which announced earlier this month that it would lay off 2,800 employees in Kansas due to production disruption.
And General Electric, which makes engines for the MAX, said the crisis reduced the cash flow by $ 1.4 billion for 2019.
Boeing also announced that it would again reduce production of the 787 Dreamliner, a top-selling aircraft that has backed revenues during the prolonged grounding of the 737 MAX.
The aerospace giant plans to reduce production to 10 planes a month in early 2021 until 2023 based on short-term market prospects, Boeing said.
The company in October had reduced production to 12 a month since 14 due to lower orders from China.
A note from JPMorgan Chase said Boeing's charges at MAX were worse than feared, although the company was spending cash at a faster rate than expected. According to reports, Boeing has aligned $ 12 billion in loans, but balance management in 2020 will be an area of questions, according to the note.
In another non-MAX development, Boeing set aside $ 410 million to cover the costs of an additional unmanned mission after NASA's December flight did not reach the International Space Station.
NASA is evaluating the data received during the December 2019 mission to determine if another unmanned mission is required, Boeing said.