The Strategist

737 MAX scandal cuts 13% off Boeing’s profit

04/25/2019 - 12:44

The situation around the ban on 737 MAX aircraft has adversely affected financial results of Boeing. In the first quarter, the net corporation’s profit decreased by 13%, to $ 2.15 billion, and revenues fell by 2%, to $ 22.9 billion. In addition, the company decided not to publish the forecast for the whole 2019, as it still needs to figure out in possible consequences of the situation around 737 MAX.

On April 24, Boeing Corporation published its financial statements for the first quarter. The company’s results for this period were strongly affected by the situation around 737 MAX and the ban on their flights, introduced worldwide. Net profit of Boeing in the first quarter decreased by 13%, to $ 2.15 billion, and revenues fell by 2%, to $ 22.9 billion.

The company said that the ban on flying 737 MAX cost $ 1 billion. The corporation also refused to publish a financial forecast for the entire 2019, as it needs to evaluate impact of this situation on future results.

The decision to ban 737 MAX flights was made by different countries in March after the second crash involving this aircraft in the last six months. In addition to the ban on flights, Boeing was also affected by the fact that in March the company failed to conclude deals on sale of 737 MAX, which until then had been its best-selling aircraft. In mid-March, the company decided to suspend shipments of this aircraft.

Boeing was going to increase the monthly production of 737 MAX from 52 to 57 aircraft by summer. In fact, production was reduced to 42.

Due to problems with the 737 MAX, Boeing may this year cede the lead in aircraft sales to its main competitor, Airbus.

The company has already reported on updating the system, which, presumably, could be the cause of the disaster. So far, however, the software has not been approved by regulators and 737 MAX aircraft have not resumed flying. “The time to return to using MAX is still associated with ongoing work with global regulators and our customers,” said Boeing CEO Dennis Muilenburg. US President Donald Trump has already advised the company to rename the 737 MAX.


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