Boeing Accepts $4.9 Billion Hit Over 737 MAX Crisis

Ongoing groundings of the 737 MAX and delivery delays will see Boeing face a $4.9 billion after-tax charge in its second quarter financial results.

Translating to $8.74 per share, the charge is the largest in the history of the company and will result in a loss of $5.6 billion in revenue and pre-tax earnings in the second quarter.

Despite this confronting news for Boeing, shares rose two percent; which according to analyst work mentioned in a Reuters article, was potentially a sign of investors being satisfied with the size of the charge and Boeing’s production plans.

In a press release on the subject, Boeing also noted other concessions and considerations to take place over many years in various economic forms.

With no clear timeline to lift the grounding, airlines remain frustrated but also understanding. Previous attempts to reintroduce the aircraft back into the skies have failed after additional issues were identified during testing.

Southwest, American and United Airlines have pushed back their 737 MAX schedule all the way to November, introducing a significant amount of flight cancellations and adjustments.

Returning the aircraft is only one part of the equation, regaining passenger confidence is the major part that everyone is questioning.

With the amount of media attention Boeing has received for negligence surrounding the crashes of two 737 MAX aircraft, the everyday public is going to be cautious, especially when they look at the safety card or hear they’re flying on a 737 MAX.

Some airlines have already attempted to mitigate this effect by avoiding the use of ‘MAX’ in their marketing, such as IAG who referred to the type as ‘737-8’ and ‘737-9’ and Ryanair who was found to have ‘737-8200’ on a new aircraft.

Ryanair ‘Rebrands’ Boeing 737 MAX

Boeing is feeling the pressure of having their cash cow grounded and is working tirelessly to get the aircraft airworthy again. Once flying again, its important to note the recovery won’t be smooth.

The lasting effects of the two crashes, Boeing’s negligence and the blurred relationship with the Federal Aviation Administration will take anything from months to years to overcome.

Would you fly on the 737 MAX after it returns to service?