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News > U.S.

Boeing Assumes US$5b in After-Tax Charges for Plane Crashes

  • Advertised as a reliable, efficient machine, the 737MAX was Boeing's best seller until nearly 400 flight passengers were killed.

    Advertised as a reliable, efficient machine, the 737MAX was Boeing's best seller until nearly 400 flight passengers were killed. | Photo: Reuters

Published 18 July 2019
Opinion

The charge will result in a US$5.6 billion reduction in revenue and pre-tax earnings for the company's second quarter, Boeing said.

The Boeing airplane manufacturing company will be assuming a US$4.9 billion dollar after-tax charge for the pair of deadly crashes suffered by passengers riding the 737 MAX plane since February.

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The charge will result in a US$5.6 billion reduction in revenue and pre-tax earnings in the second quarter, Boeing officials said in a statement.

Known as the world’s largest airplane manufacturer, the Chicago-based company is set to release financial results July 24.

“We are taking appropriate steps to manage our liquidity and increase our balance sheet flexibility the best way possible as we are working through these challenges,” Boeing Chief Financial Officer Greg Smith said in a statement.

After two 737 MAX crashes in Ethiopia and Indonesia within five months of each other, the company is experiencing its worst crises in history. Advertised as a reliable, efficient machine, the plane was Boeing's best seller until nearly 400 flight passengers were killed.

In a tweet, Boeing Chief Executive Dennis Muilenburg said the company remains focused on safely returning the 737 MAX to service. “The MAX grounding presents significant challenges for our customers, company and supply chain,” he wrote.

The multi-national estimates costs to produce its flagship single-aisle aircraft increased by $1.7 billion in the second quarter, driven primarily by higher costs from a longer-than-expected reduction in its aircraft production rate.

Boeing also said it believes the 737 MAX's return to service in the United States and other countries will begin early in the fourth quarter, though the company cautioned the exact timeline could shift as it already has in recent weeks.

Boeing is facing a slew of probes by regulators across the world as well as U.S. lawmakers and the Department of Justice.

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