Boeing says 737 Max costs to surpass $18 billion

click to enlarge An unpainted Boeing 737 Max aircraft at the company's factory in Renton, Wash., on Jan. 22, 2020. Boeing on Wednesday, Jan. 29, 2020, said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts. - LINDSEY WASSON/THE NEW YORK TIMES
Lindsey Wasson/The New York Times
An unpainted Boeing 737 Max aircraft at the company's factory in Renton, Wash., on Jan. 22, 2020. Boeing on Wednesday, Jan. 29, 2020, said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts.
By David Gelles
The New York Times Company

Boeing on Wednesday said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts.

The new estimate, announced during Boeing’s quarterly earnings report, is the company’s most recent approximation of just how expensive it will be to return the Max to service, compensate airline customers and restart the shuttered 737 factory.

Boeing continues to grapple with the fallout from the crashes of two Max jets in 2018 and 2019, which killed 346 people, leading to the worldwide grounding of the plane in March. In addition to the rising costs, the company is contending with a new chief executive, the temporary shutdown of the 737 factory and a range of challenges in other parts of the business.


Boeing on Wednesday said that the costs associated with shutting down and restarting the factory would amount to some $4 billion. The decision to temporarily halt production of the Max was only made last month, and Boeing had not previously given guidance on what the move would cost.

The company also said that the cost of compensating airlines that have suffered lost sales as a result of the grounding of the Max was now expected to reach $8.3 billion, up from a previous estimate of $5.6 billion. That figure represents a mixture of cash payments to airlines, as well as discounts on future sales.

And Boeing said that as a result of the grounding, which has lasted nearly a year now, it expected the overall cost to produce the 737 Max to rise to $6.3 billion in the years ahead, up from an earlier estimate of $3.6 billion.

In total, the anticipated costs now equal more than $18.6 billion, or nearly 20% of Boeing’s annual sales before the Max was grounded.


The Max crisis continued to weigh on the company’s financial results. Revenue for the quarter was $17.9 billion, down 37% from the same time a year earlier, before the jet was grounded. For the full year, Boeing reported revenues of $76.6 billion, a 24% decline from the previous year.

Boeing also said it would incur a charge of $410 million as a result of its botched rocket launch late last year, when a space capsule it designed for NASA failed to reach the correct orbit.

This was the company’s first quarterly earnings report with David L. Calhoun at the helm, following the ouster of the previous chief executive, Dennis A. Muilenburg.

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