American plane maker Boeing reported its first annual loss in more than two decades on Wednesday (29 January 2020), weighed down by the continued grounding of its 737 MAX jet. The company said it lost US$636 million in 2019, marking the first annual loss since 1997, compared to a net profit of US$10.46 billion in 2018. Boeing reported a loss of US$2.33 per share for the fourth quarter of last year. Revenue in the last three months of the year dropped 37 percent to US$17.91 billion compared to US$28.34 billion in the year-earlier period. The loss was the company’s first for a full year since 1997.
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Boeing is struggling through a crisis stemming from two crashes of its 737 Max that killed 346 people aboard the flights. The manufacturer this month suspended production of the planes, which regulators grounded in March after the second of the two fatal flights.
The debacle’s costs to Boeing are rising to more than US$19 billion, the company said, roughly double what it outlined in the previous quarter. That amount includes an additional US$2.6 billion pretax charge to compensate airlines and other 737 MAX customers because of the grounding. Boeing had taken a US$5.6 billion pretax charge in the second quarter to compensate its customers, according to CNBC.
“It’s a very challenging moment for Boeing,” Boeing’s newly installed CEO, David Calhoun, said. Calhoun said Boeing needs to focus on rebuilding trust, boosting transparency and shoring up engineering with an emphasis on safety. He expressed confidence the MAX will re-enter service despite repeated delays in winning regulatory approval, and win the trust of pilots and passengers.
Calhoun, who served on Boeing’s board for a decade before becoming CEO, pushed back against the notion he was an insider responsible for earlier management decisions about the MAX. He said he would address Boeing’s broader cultural problems, but said cost or scheduling pressures weren’t linked to Boeing’s flawed design of a flight-control system implicated in both MAX crashes. “I watched the same movie you did—I think I was in the front-row seat, and I might come to exactly the same conclusions you do,” Calhoun said. “My leadership role here at Boeing is intended to make changes that correct a lot of those situations.”
Boeing said it was also slowing production of its 787 Dreamliner to 12 per month from 14 and for now has cancelled plans for a middle of the market plane that would seat 220 to 270 passengers and intended to challenge a rival Airbus SE jet that has dominated sales. Boeing’s also took a US$410 million charge on its CST-100 Starliner space capsule following the failure of its debut mission to reach its planned orbit.
