Boeing, an icon of American manufacturing, suffered its first annual financial loss in more than two decades while the cost of fixing its marquee aircraft after two deadly crashes soared to more than $18 billion.
New CEO David Calhoun on Wednesday stood by his estimate that regulators will certify changes Boeing is making to the 737 Max by mid-year.
Calhoun criticized the company’s prior leadership for not immediately disclosing a trove of damning internal communications that raised safety questions about the Max. He promised to be more transparent.
“I have to restore trust, confidence and faith in the Boeing Co.,” he told Wall Street analysts.
Boeing reported a loss of $1 billion in the fourth quarter as revenue plunged 37% due to the grounding of the Max.
The company suspended deliveries of the plane last spring and hadn’t expected the stoppage to last this long.
The company lost $636 million for all 2019, compared with a profit of nearly $10.5 billion in 2018.
It was the first annual loss since 1997, when Boeing was roiled by parts shortages, production delays, and expenses from merging with McDonnell Douglas.
Boeing’s problems aren’t limited to the Max.
Slowing demand for larger planes led the company to announce it will reduce production of the 787 Dreamliner from 14 a month to 12 later this year, then 10 early next year. The plane has become more important to Boeing’s health during the Max grounding.
In addition, Boeing’s 777X jet is behind schedule, and a decision on whether to build a new mid-size plane to compete with one from Airbus has been delayed.
Revenue in the company’s defense and space business fell 13% and it took a $410 million charge in case NASA requires another unmanned flight of the Starliner — the spacecraft that failed to reach the International Space Station during a test flight in December.
Boeing’s focus, however, is on fixing the Max. Without any Max deliveries since April, the company is burning through cash, and Boeing confirmed that it is lining up bank commitments for $12 billion in new borrowing.
The Max was grounded worldwide last March, after two crashes within five months killed 346 people in Indonesia and Ethiopia. The crisis torpedoed sales and deliveries of new jetliners, leaving Boeing far behind Airbus. It caused a shutdown in Max production, layoffs at suppliers, and led to the firing of CEO Dennis Muilenburg.
U.S. airlines that own Maxes – Southwest, American and United – don’t expect it back until after the peak of the summer travel season. It is anyone’s guess about how willing passengers will be to fly on the plane.
