Boeing sees $4.9b blow from fallout of 737 Max grounding

Boeing plans to report a $4.9b accounting charge with its Q2 results next week, a sign of the widening financial toll from the company’s beleaguered 737 Max jetliner. The after-tax writedown, equivalent to $8.74 a share, covers potential concessions and considerations for airline customers who have been forced to cancel flights and line up replacement aircraft as the Max’s grounding enters its fifth month, Boeing said in a statement Thursday. The costs will clip $5.6b from revenue and pretax earnings in the quarter. The assumptions behind the accounting charge also provided a glimpse of Boeing’s recovery plan. The company estimated that the Max will be approved to return to service in the US and other countries beginning “early in the fourth quarter,” easing fears that the timetable would slip to 2020. “This is a defining moment for Boeing,” CEO Dennis Muilenburg said. “Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The Max grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.” While Boeing warned that the timing of a return to service could change, the estimate of Q4 approval was in line with recent schedule changes by the model’s US operators. The Q4 time frame also rebuts a recent Wall Street Journal report suggesting that initial flights would slip to 2020.<br/>