The Boeing logo is seen on a Boeing aircraft in Long Beach, California. Picture: REUTERS
The Boeing logo is seen on a Boeing aircraft in Long Beach, California. Picture: REUTERS

Bengaluru — Boeing has abandoned its 2019 financial outlook,  saying it halted share buybacks in mid-March and announcing $1bn in increased costs due to the grounding of its 737 Max jets.

Chicago-based Boeing is facing one of the biggest crises in its history following crashes involving its fastest-selling jetliner, one on Lion Air in Indonesia on October 29 and another on Ethiopian Airlines on March 10, which together killed all 346 on board.

The world’s largest aircraft maker reported first-quarter revenue and cash flow below Wall Street estimates, largely due to stopping deliveries of the 737 Max jets, which were grounded in March after the two crashes.

The crashes caused regulators worldwide to ground the 737 Max and triggered investigations into the aircraft’s development by federal transportation authorities and the US department of justice.

Although safety experts have raised questions over crew performance in both crashes, the regulatory fallout has been dominated so far by questions over antistall software known as MCAS, which Boeing has acknowledged was a common link in the separate chains of events leading to both crashes.

Boeing cut production of the jets following the crashes to 42 aircraft per month, down from 52, and its operating cash flow in the first quarter was about $350m lower than a year earlier.

Boeing also said it booked unspecified charges related to developing a fix for MCAS and pilot training, and is making steady progress toward certification of the software after completing more than 135 test and production flights.

The company said it will be issuing a new forecast in the future when it has more clarity around the issues surrounding the 737 Max.

First-quarter operating cash flow declined to $2.79bn, from $3.14bn, missing the Wall Street average estimate of $2.82bn.

Revenue fell 2% to $22.92bn, below analysts’ average estimate of $22.98bn.

Excluding certain items, Boeing said its core earnings fell to $3.16 per share in the quarter from $3.64 per share a year earlier. That matched analysts’ average estimate.

Reuters