Boeing has posted its 2019 first-quarter results, which indicate the initial financial impact of the 737 MAX crashes and groundings as well as acknowledging continued uncertainty about the full cost.
The US manufacturer’s April 24 earnings release was the first quarterly posting since the March 10 crash of an Ethiopian Airlines MAX and the subsequent worldwide grounding of the new narrowbody.
Revenue and profit were down year-over-year, as expected, although the numbers were roughly in line with Wall Street predictions that were revised downwards after the MAX grounding. However, the company did announce it would not be issuing any revenue forecasts for the rest of 2019 because of the ongoing uncertainty related to the MAX.
Overall, revenue was down 2% to $22.9 billion compared to the 2018 first quarter while core operating earnings fell 21% to $1.9 billion and net earnings were down 13% at $2.1 billion. Earnings per share were $3.16 versus $3.64 a year ago.
Boeing Commercial Airplanes’ (BCA) first-quarter revenue was 9% down at $11.8 billion, reflecting lower 737 deliveries. The company has not sold any MAXs since the Ethiopian crash–the second MAX after the Lion Air crash five months earlier—but new widebody orders included 18 777Xs to International Airlines Group, 20 787s to Lufthansa and 10 787s to Bamboo Airways.
BCA’s first-quarter earnings were $1.2 billion versus $1.4 billion and operating margin was down one percentage point to 9.9%.
The company stressed that its airliner backlog “remains healthy” with over 5,600 airplanes valued at $399 billion.
However, Boeing acknowledged that there was “uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet” so it is suspending financial forecasts for the rest of the year.
While the company is making “steady progress” to certification for a software update for the MAX, with over 135 test and production flights of the software update completed, most MAX operators have already made the decision to keep the aircraft out of their schedules well into the summer regardless of when FAA and other regulatory authorities lift the groundings. Those extended periods will only mean more cost for Boeing in terms of compensation. In another major cost hit, Boeing has also reduced its 737 production rate from 52 to 42 to allow it to focus on the MAX.
Boeing chairman and CEO Dennis Muilenburg acknowledged in a statement with Wednesday’s earnings release that trust and confidence among its customers, regulators and the flying public needed to be re-earned.
