Boeing is warning that it might have to halt production of the 737 Max if grounding continues much longer.

The company reported its largest-ever quarterly loss of three billion dollars on Wednesday because of the troubled aeroplane.

If hurdles with regulators worldwide continue, Boeing said it would consider reducing or shutting down production of the 737 Max entirely.

However, Boeing boss Dennis Muilenburg is confident the plane will be back in the air by October. </s> NEW YORK (AFP) - Boeing reported its biggest loss ever on Wednesday (July 24) as the 737 Max crisis drags on, and the company warned it could be forced to temporarily halt production of the plane if the grounding is extended much longer.

The aviation giant's troubles have been mounting since the Max was taken out of service worldwide in March following two deadly crashes that claimed 346 lives, and it already set aside nearly US$5 billion to compensate customers.

But the warning it might have to suspend production of the aircraft jolted Wall Street, prompting losses to accelerate during a late-morning conference call with Boeing executives that reinforced the cloudiness surrounding the outlook.

Getting the Max back in the air is a "complex" multi-regulator process "that will take time to get done," Boeing chief executive Dennis Muilenburg said.

"We have a clear understanding of the work that has to be done but there is still uncertainty in the timeline."

Boeing reported a loss of US$2.9 billion for the second quarter, a huge drop from the US$2.2 billion profit posted in the same period of last year.

The loss was not surprising following last week's announcement the company had set aside US$4.9 billion after taxes to compensate airlines for canceled flights and the delay in plane deliveries.

Meanwhile, revenues in the latest quarter tumbled 35.1 per cent to US$15.8 billion, reflecting the hit suffered due to halted deliveries of the 737 Max, a top-selling plane.

Analysts from Cowen, an investment bank, pointed to a "strong performance" in production of Boeing's 787, another big seller, but noted the company pushed back first flight of the 777X, a new long-haul plane under development.

The company has blamed the delay on problems with the engine, which is being built by General Electric.

Adding to the confused outlook, Boeing has still not updated its full-year profit forecast after withdrawing its targets in April due to uncertainty about the Max.

However, at the same time it boosted dividend payments in the second quarter. Compared with last year, Boeing spent US$1.2 billion on dividends, up 20 percent from the year-ago period.

Temporarily halting output "is not something we want to do but it is an alternative we have to prepare for as a smart part of our thorough and disciplined process here to make sure we're covering all scenarios," Muilenburg said.

Boeing in April cut production on the Max to 42 a month from 52, storing planes until the jet is cleared to fly. But it has not cut jobs at its Washington state factory.

The crisis already has rippled through the US economy, hitting manufacturing output as well as exports, which widens the politically-sensitive trade deficit and could drag on growth.

Treasury Secretary Steven Mnuchin said Wednesday the Max is a priority for the White House.

"We want to absolutely make sure that before the 737 Max flies that it's safe," Mnuchin told CNBC. "We need to figure out how they continue to compete against Airbus because they are a leading US company."

Airlines have repeatedly pushed back the target date for returning the jets to service as the regulatory timeframe has dragged on.

The Federal Aviation Administration in June identified problems with microprocessor which extended the timeline.

Boeing is developing a software fix to address a problem the "MCAS" flight handling system linked to both crashes.

Muilenburg said the company is in daily contact with the FAA and still expects to submit its software fix to regulators in September, with approval about a month later. However, that timeframe is "dynamic."

He also said the company also is in "the middle of working our way" through the FAA microprocessor issue.

"We know we're making progress," he said. "But until we complete all of the certification activities, there's always some risk of new items opening up."

Boeing shares have lost about 14 per cent since the Ethiopian Airlines crash in March, while the broader S&P 500 has gained about 10 per cent. </s> Boeing reported its largest ever quarterly loss on Wednesday, as the cost of grounding its fleet of 737 Max airliners took its toll.

The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year. Sales fell 35% to $15.75bn.

The 737 Max was Boeing’s best selling aircraft until the fleet was grounded worldwide in March following two fatal crashes.

Last week Boeing said it would take a $5.6bn charge to cover potential compensation to customers. The company also expects the cost of manufacturing the 737 to rise by $2.7bn due to production slowdowns. A $100m fund is being established to compensate the families and communities affected by the crashes.

“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 Max to service,” Boeing’s chief executive, Dennis Muilenburg, said in a statement.

“During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”

Regulators across the world continue to investigate the fatal crashes of a Lion Air Max in Indonesia and an Ethiopian Airlines flight in Ethiopia that claimed a total of 346 lives.

Last week a father who lost five family members in the Ethiopian disaster accused the company of “utter prejudice and disrespect” and said Boeing had pursued higher a higher share price and profits “at the expense of the safety of human life”.

The grounding of the 737 Max has had wider consequences for the US. American Airlines, Southwest Airlines and United Airlines all used the Max and have canceled flights into November as a result of the grounding, depressing revenues.

Boeing has predicted that the Max will be flying again by the end of the year and appears to be preparing to change the plane’s name to the 737 8200. </s> (Reuters) - Boeing Co (BA.N) posted its largest-ever quarterly loss on Wednesday due to the spiraling cost of resolving issues with its 737 MAX, warning it may have to shut production of the grounded jet completely if it runs into new hurdles with global regulators getting its best-selling aircraft back in the air.

Boeing Chief Executive Dennis Muilenburg said he was confident the MAX would be back in service as early as October, but acknowledged for the first time that Boeing may have to slow or completely halt production of the 737 MAX, a step it has not had to resort to on any commercial plane for more than 20 years.

The world’s largest planemaker also reported a fresh delay on its 777X widebody program as General Electric Co (GE.N) engine problems pushed the first flight into 2020.

Boeing is looking to restore customers’ faith in its 737 MAX and to satisfy the requirements of regulators by reprogramming the software pinpointed as a common factor in two deadly crashes in the span of five months.

“This is a defining moment for Boeing,” Muilenburg told analysts. He said Boeing has held weekly technical calls and a number of conferences with MAX operators around the world and nearly 225 sessions in flight simulators testing its software.

Muilenburg’s comments came after the company posted its largest-ever quarterly loss, diving nearly $3 billion into the red while burning $1.01 billion in cash in the quarter.

Investors shrugged off the large loss after Boeing announced heavy charges last week, bringing the total cost so far of the 737 MAX crisis to more than $8 billion, mainly due to compensation the planemaker will have to pay airlines for the delayed deliveries and lower production.

Boeing’s shares dipped only slightly after second-quarter results were announced, but slipped 3 percent after Muilenburg’s comments on the possibility of lowering production further, or stopping it temporarily.

Chicago-based Boeing has been unable to deliver any 737 MAX aircraft since the single-aisle plane was grounded worldwide in March after two fatal crashes in Indonesia and Ethiopia killed 346 people.

Click here to view an interactive graphic: tmsnrt.rs/2MaWqTt.

Muilenburg said the company would consider further 737 output cuts below the current rate of 42 aircraft per month, or potentially suspending production if warranted - a step Boeing has not taken since 1997 when it halted 747 production and delayed introduction of a new 737 so suppliers could catch up.

Boeing reduced the number of single-aisle aircraft it produces monthly in the Seattle area to 42 from 52 after the second crash in Ethiopia while suspending deliveries to airlines, cutting off a key source of cash and hitting margins.

The lower rate means Boeing has to pay more for parts, which are priced according to the volume Boeing buys. Boeing said it was working toward building 57 of the 737s a month in 2020.

Boeing also faces issues with other planes. It said its first flight of the 777X - the latest iteration of its popular long-range twin-aisle aircraft - is now delayed until early 2020 due to the engine problems announced last month, while its current plan for a first delivery to customers in late 2020 faced significant risk.

The 777-9, the larger of two new jets in the 777 family, was initially scheduled for first flight in the fourth quarter of 2018 with delivery to the first customer in the second quarter of 2020, according to a Boeing certification plan seen by Reuters.

Boeing would have to sell more 777 freighters to avoid a slowdown in output caused by 777X delays, but Muilenburg pointed to what he called “strong demand signals” despite global trade tensions.

The grounding of the 737 MAX has sent shockwaves through the industry and also pushed back the launch of a new Boeing aircraft, a twin-aisle jet for the middle of the market.

That jetliner, known as NMA, is not just a crucial piece in Boeing’s fight with archrival Airbus (AIR.PA) in the lucrative longer-haul market but also lays foundations for the eventual development of a 737 replacement, industry sources have said.

Muilenburg said the company is making progress on building the business case for NMA, but getting the MAX flying commercially remains its “top priority.”

“We’re not going to run to any artificial timeline,” Muilenburg said, referring to a decision whether to launch the aircraft.

Boeing said free cash flow fell to a negative $1.01 billion in the quarter, the first full quarter of operations since the MAX was banned commercially, though that was narrower than the negative $2.09 billion analysts had expected, according to IBES data from Refinitiv.

Boeing Chief Financial Officer Greg Smith told analysts the 737 MAX compensation to airlines could hurt cash flow in 2019 and beyond, and said Boeing will continue to “diligently review all levers available” to minimize the financial impact.

Industry sources say the company has already embarked on cost cuts across the board.

Vertical Research Partners analyst Robert Stallard said in a note, however, that Boeing’s results “could have been worse.”

“Although the headline numbers for 2Q look pretty grim, they are not as bad as we had been forecasting,” he said.

The company said it would issue a new 2019 outlook at a future date. It suspended giving any 2019 guidance in April.

Boeing’s net loss for the second quarter was $2.94 billion, compared with a profit of $2.20 billion, a year earlier.

Sales slipped 35% to $15.75 billion and also came in below the average estimate of $18.55 billion, according to Refinitiv data.

Global airlines have had to cancel thousands of flights and use spare aircraft to cover routes that were previously flown with the fuel-efficient MAX, eating into their profitability. </s> July 24 (Reuters) - Boeing Co posted its largest-ever quarterly loss on Wednesday, diving nearly $3 billion into the red as it wrestles with a longer-than-expected grounding of its best-selling 737 MAX.

The world's largest planemaker also reported a fresh delay on its 777X widebody program as engine problems pushed the first flight into 2020 and it warned of possible further delays.

Investors largely shrugged off the large loss, which the company flagged last week, but sent shares lower after Muilenburg's comments on production, to trade about 2 percent lower.

Chicago-based Boeing has been unable to deliver any 737 MAX aircraft since the single-aisle plane was grounded worldwide in March after two fatal crashes in IndonesiaEthiopia and Indonesia killed 346 people in a span of five months.

The total cost so far of the 737 MAX crisis now exceeds $8 billion after Boeing disclosed a $4.9 billion charge last week that includes compensation the planemaker will have to pay airlines for the delayed deliveries.

The second-quarter loss was Boeing's biggest ever, according to company records. Click here to view an interactive graphic:

Boeing has embarked on a campaign to restore faith in its most popular jet and has pledged to remove any risk by reprogramming the software pinpointed as a common factor in both crashes as it faces pressure to convince MAX operators and global regulators that the aircraft is safe to fly again.

"This is a defining moment for Boeing," Muilenburg told analysts, adding that the company has held weekly technical calls and a number of conferences with MAX operators around the world and nearly 225 sessions in flight simulators testing its software.

Muilenburg said the company would consider further 737 output cuts below the current rate of 42 aircraft per month, or potentially suspending production if warranted.

Boeing reduced the number of single-aisle aircraft it produces monthly in the Seattle area from 52 to 42 after the second crash in Ethiopia while suspending deliveries of the aircraft to airlines, cutting off a key source of cash and hitting margins.

The lower rate means Boeing has to pay more for parts, which are priced according to the volume Boeing buys. Boeing said it was working toward building 57 of the 737s a month in 2020, and that airplanes produced during the grounding and included within inventory will be delivered over several quarters following return to service.

Executives on the call were also expected to explain how Boeing will try to repair its image with the flying public and stem its loses, as well as more details on General Electric Co engine delays on the 777X widebody program.

Boeing said its first flight of the 777X - the latest iteration of its popular long-range twin-aisle aircraft - is now delayed until early 2020 due to the engine problems announced last month, while its current plan for a first delivery to customers in late 2020 faced significant risk.

The 777-9, the larger of two new jets in the 777 family - was initially scheduled for first flight in the fourth quarter of 2018 with delivery to the first customer in the second quarter of 2020, according to a Boeing certification plan seen by Reuters.

The grounding of the 737 MAX has sent shockwaves through the industry and also pushed back the launch of a new Boeing aircraft, a twin-aisle jet for the middle of the market. That jetliner, known as NMA, is not just a crucial piece in Boeing's fight with archrival Airbus in the lucrative longer-haul market but also for the eventual development of a 737 replacement, industry sources have said.

Boeing said free cash flow fell to a negative $1.01 billion in the quarter, the first full quarter of operations since the MAX was banned commercially, though that was narrower than the negative $2.09 billion analysts had expected, according to IBES data from Refinitiv.

Boeing Chief Financial Officer Greg Smith told analysts the 737 MAX compensation to airlines could hurt cash flow in 2019 and beyond, and said Boeing will continue to "diligently review all levers available" to minimize the financial impact.

Vertical Research Partners analyst Robert Stallard said in a note that, "although the headline numbers for 2Q look pretty grim, they are not as bad as we had been forecasting."

The company said it would issue a new 2019 outlook at a future date, as the current forecast, which was suspended in April following the two deadly crashes, does not reflect the recent charges.

Boeing's net loss for the first full quarter of operations since 737 MAX commercial flights were halted was $2.94 billion, compared with a profit of $2.20 billion, a year earlier.

Sales slipped 35% to $15.75 billion and also came in below the average estimate of $18.55 billion, according to Refinitiv data.

Global airlines have had to cancel thousands of flights and use spare aircraft to cover routes that were previously flown with the fuel-efficient MAX, eating into their profitability. </s> Washington D.C.: Boeing on Wednesday (local time) said that it was considering the possibility of halting the production of 737 Max if the grounding of the aircraft continues further. Boeing has continued to build the 737 Max, its bestselling jet, although at a slower pace. The plane has been grounded since mid-March because of two fatal crashes that killed more than 300 people.

Boeing hopes to get approval for the plane to fly again sometime early in the fourth quarter. CEO Dennis Muilenburg was quoted as saying by CNN that any further delays in approval to fly the 737 Max again could jeopardize its production. A further slowdown or temporary shutdown of 737 Max production is “not something we want to do, but an alternative that we have to prepare for,” Muilenburg told investors on a conference call.

He added that the company needs to prepare for that “to make sure we’ve covered all scenarios.” It is unclear when the 737 Max will be allowed to return to service. Boeing is working on a software fix to a safety system which is believed to have caused the two crashes.

 But it says it won’t be able to present that fix to aviation authorities until September at the earliest, and it hopes to have a certification flight in October.

Because of the grounding, the company reported its largest loss ever – amounting to USD 3.7 billion in the second quarter. Boeing said any slowdown or halt in production could lead to even more losses. The slower pace of 737 Max production has already increased Boeing’s production costs by about USD 1.7 billion. The company had already warned investors that it would take a USD five billion profit hit from its inability to deliver the 737 Max to its customers. </s> The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year

Boeing said it could halt production of the 737 Max jet on Wednesday as it reported the company’s largest ever quarterly loss following two fatal accidents involving the plane.

The company lost $2.9bn in the three months to the end of June, compared to a profit of $2.2bn for the same period last year. Sales fell 35% to $15.8bn. Chief executive Dennis Muilenburg said production of the plane could be slowed or halted if regulators do not move to lift the ban on the plane.

The 737 Max was Boeing’s best selling aircraft until the fleet was grounded worldwide in March following crashes in Indonesia and Ethiopia. In January Boeing’s executives said the Max was the fastest selling plane in its history and the company expected to deliver between 895 and 905 airplanes this year.

Now it has become the most costly plane in Boeing’s history.

Boeing has predicted that the Max will be flying again by the end of the year, but this month the Wall Street Journal reported that government and industry officials believe a return date of January 2020 is more likely.

On a call with analysts Muilenburg said the company may have to consider slowing or halting production if there are further delays in getting the plane back into the skies.

Boeing is still producing 42 of its 737 jets a month and plans to boost that rate to 57 next year. But if there are further setbacks, Muilenberg said: “We might need to consider possible further rate reductions or other options including a temporary shutdown of the Max production.”

Muilenberg added that Boeing expected to submit its “final certification package” to the Federal Aviation Administration, the US regulator, in September.

Last week Boeing said it would take a $5.6bn charge to cover potential compensation to customers. The company also expects the cost of manufacturing the 737 to rise by $2.7bn due to production slowdowns. A $100m fund is being established to compensate the families and communities affected by the crashes.

“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 Max to service,” Muilenburg, said in a statement.

“During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”

Regulators across the world continue to investigate the fatal crashes of a Lion Air Max in Indonesia and an Ethiopian Airlines flight in Ethiopia that claimed a total of 346 lives.

Investigations have centered on the plane’s Manoeuvring Characteristics Augmentation System (MCAS) flight control software, which was designed to keep the aircraft stable in flight. In both crashes the pilots appear to have fought in vain to keep the plane’s nose up as the system, triggered by flawed sensor readings, dragged it down. Boeing executives subsequently tried to share some of the blame with the pilots.

Last week a father who lost five family members in the Ethiopian disaster accused the company of “utter prejudice and disrespect” and said Boeing had pursued higher a higher share price and profits “at the expense of the safety of human life”.

The grounding of the 737 Max has had wider consequences for the US aerospace industry. American Airlines, Southwest Airlines and United Airlines all used the Max and have canceled flights into November as a result of the grounding, depressing revenues. Ryanair, another major customer and Europe’s largest short-haul airline, has said late deliveries of the 737 Max will force it to cut routes and shut bases as it curbs expansion plans. </s> Boeing Co. said it may slow or halt production of its 737 MAX jetliner if regulators don't approve its return to service by the end of this year.

The warning came as the aerospace giant on Wednesday reported its biggest-ever quarterly loss after taking an initial $7 billion hit on the grounding and slowed production of the MAX.

Chief Executive Dennis Muilenburg said on a call with analysts that while Boeing plans to continue producing 42 of its 737 jets a month and boost that rate to 57 next year, any slippage in the timeline for the return of the MAX could oblige the company to lower output.

"We might need to consider possible further rate reductions or other options including a temporary shutdown of the MAX production," Mr. Muilenburg said.

Boeing has said it hopes to restart MAX deliveries in the fourth quarter, but some officials and airlines don't expect it to fly again until next year. The MAX has been barred by regulators from commercial flight since March following two fatal crashes.

His comments sent Boeing shares lower, extending a drop of more than 2.5% on the day.

Boeing lost $2.94 billion in the June quarter, compared with a profit of $2.2 billion a year earlier, a slightly smaller loss than analysts expected. Sales dropped 35% to $15.75 billion as it delivered only 90 jetliners with MAX shipments on hold. Boeing didn't reinstate the financial guidance it suspended in April.

A huge $5.6 billion charge in the quarter to compensate MAX customers marked Boeing's latest effort to guide investors on the mounting cost of the crisis that has engulfed its best-selling jetliner.

Boeing also said the first flight of its new 777X jetliner would be delayed until early next year because of problems with the new engines General Electric Co. is making for it.

The halt in MAX deliveries since April dented Boeing's closely watched free cash flow, which turned negative for the first time in more than four years, draining $1 billion from its balance sheet, though recent debt issuance boosted its liquidity to $9.6 billion at the end of the quarter.

The cash outflow was less than analysts expected, though, as a result of higher defense sales and shipments of the 787 Dreamliner.

Boeing last week said it would take the $5.6 billion pretax charge in the June quarter to cover potential compensation to MAX customers, which could include discounts and services, as well as cash payments. The charge is expected to cost $4.4 billion after tax.

The compensation charge left Boeing's commercial airplanes unit with a $4.95 billion operating loss for the quarter, mitigated by increased production of the 787 Dreamliner.

The company also estimated the costs to manufacture the MAX would increase by $2.7 billion due to a production slowdown that has lasted longer than expected, set against an undelivered block of 3,100 MAX jets.

Boeing's defense unit reported a profit of $975 million, and the two-year-old services business added $687 million.

Overall, Boeing reported a per-share loss of $5.21, the first deficit since a $234 million deficit in the second quarter of 2016 when it booked charges on the 787, 747-8 and KC-46A Pegasus military tanker. </s> Boeing said Wednesday that it was considering halting production of the 737 Max if the grounding of its most popular plane persists, a move that could damage airlines, suppliers and even the U.S. economy.

The company is struggling to contain the fallout from two deadly crashes of the Max. It has already announced more than $8 billion in costs related to the accidents and is producing the planes at a slower rate.

The damage is spreading through the constellation of companies connected to Boeing, the nation’s largest aerospace manufacturer. Airlines around the world have canceled thousands of flights, costing them billions of dollars, and some carriers have reined in expansion plans. Suppliers like General Electric, which makes engines for the Max, are expecting lower revenue in the quarter.

The economic toll is also rising. Orders of durable goods in the United States, which include commercial airplanes, were down 1.3% in May, the third drop in four months, according to the Census Bureau.

“The fact that they talked about it for the first time is significant,” said Scott Hamilton, managing director of Leeham Co., an aviation consultancy. “When Boeing starts talking about a topic and repeating it, especially in the same event, they’re signaling that something is going on.”

After the crashes, Boeing slowed production of the 737 family to 42 planes per month in April, down from 52. It cannot deliver any Max jets until regulators clear the plane to fly and has stockpiled more than $30 billion worth of planes in Seattle.

Boeing has said it expected the Max to return to service late this year. But Boeing and regulators keep finding new problems with the model, leading to a cascading series of delays.

Muilenburg said the decision to halt production would depend on various issues, including the date the Max is likely to return to service as well as its ability to store and maintain the hundreds of completed planes not yet delivered.

He added that temporarily halting Max production might make more sense than reducing production levels. Given what it costs to operate and staff the production line, the Max program could become unprofitable if Boeing does not make enough planes each month.

“It is significant that not only Muilenburg talked about, but that Greg Smith talked about it, too,” Hamilton said. “For those of us that have followed Boeing for decades, this is them raising the caution flag.”

The three U.S. carriers that fly the Max - Southwest Airlines, American Airlines and United Airlines - have canceled thousands of flights into November, depressing their revenue. Ryanair, the Irish budget airline, said this month that it would scale back expansion plans because the Max planes it ordered were delayed.

SpiritAerosystems, the largest supplier for the Max, has already cut hours and pay for 4,000 workers and is especially vulnerable to a production halt. And General Electric, which makes the Max engines through a partnership with Safran of France, is also expected to record a dip in revenue as a result of the grounding when it reports earnings next week.

“If Boeing has to halt production, which we do not expect but which is a possibility, it would have a big ripple effect on suppliers throughout the supply chain,” said Jim Corridore, an analyst at CFRA Research.
Boeing reports its largest-ever quarterly loss, of US$2.9 billion, as a result of the grounding of its 737 MAX series, with the company saying that it could halt its production.