The impact of the global grounding of its 737 Max planes is being felt by the United States based plane maker Boeing as the company reported its first yearly loss in more than two decades, the company announced on Wednesday.
Analysts found a significant impact of the grounded 737 Max planes of the company as it was the best seller and a cash cow for it.
In 2019, a loss of $636 million was announced by Boeing which was the first time that the company made an annual loss since 1997. In contrast, the company had posted a profit of $10.46 billion for the year before. But that was before the two deadly crashes involving the 737 Max planes within a span of just five months which killed 346 people in total. The plane was the best seller for the company before it was grounded the world over.
The loss reporting of the company resulted in a drop in 3 per cent in trading.
The production of the plane was suspended by the plane maker earlier in January. The plane was grounded by regulator in March after the second crash of a plane of Ethiopian Airlines. m
For the fourth quarter, a loss of $2.33 per share was reported by Boeing in its earnings statement. There was a 37 per cent drop in the revenues of the company in the last three months of the year to touch $17.91 billion compared to the year before period revenue of $28.34 billion.
The company said that the hit because of the 737 Max crisis is rising to surpass more than $18 billion which is about double the amount that the company had predicted in the earlier quarter. An addition of $2.6 billion pretax charge to compensate airlines 737 Max customers who were not delivered the 737 Max planes was included in that number. Adjustments towards costs for compensating its customers to the tune of $5.6 billion in the form of pretax charge have been taken by Boeing in the second quarter.
The worst annual sales figures in decades was reported by the company recently even as its European rival Airbus overtook Boeing as the number one plane maker of the world in terms of production.
The first earnings call at the helm of the company is set to be faced by Dave Calhoun, who was appointed as the CEO this month. Analysts are expecting that the CEO will provide a clear roadmap about how he would bring the company out of the mess and the recovery plan and the costs for company because of the 737 Max crisis. Last week, the company said that it expects that the regulators will give the safety certificate to the 737 Max planes by the middle of this year. However the US regulator FAA has said that the green signal could come even before that.
(Adapted from CNBC.com)