Boeing Profit Drops on 737 MAX Grounding
Boeing continues to target a fourth quarter return to service of the 737 MAX as it reported a 53 percent drop in quarterly profit.
The grounding of the MAX meant commercial aircraft deliveries dropped 67 percent to 62 from third quarter 2018’s total of 190. The nine month delivery total was down to 301 from 568 last year.
The drop in deliveries pushed the company’s overall third quarter revenue down 21 percent to a shade under USD$20 billion. Boeing doesn’t receive final aircraft payments until they are delivered.
The lower 737 deliveries were partially offset by higher military and services volume, but operating cash flow dropped to minus $2.4 billion.
CEO Dennis Muilenburg said the company is still targeting a 737 MAX return to service during this quarter after the FAA received the final software version and documentation.
“Boeing has developed software and training updates for the 737 MAX and continues to work with the FAA and global civil aviation authorities to complete remaining steps toward certification and readiness for return to service. These regulatory authorities will determine the timing and conditions of return to service in each relevant jurisdiction,” the quarterly report says.
Boeing assumes that with a return to service during the fourth quarter of 2019, it will gradually increase the 737 production rate from 42 per month to 57 by late next year.
“Our top priority remains the safe return to service of the 737 MAX, and we're making steady progress,” Muilenburg said. “We've also taken action to further sharpen our company’s focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality and integrity always at the forefront.”
North American operators of the MAX have removed the aircraft from their flight schedules until February.
In addition to the ongoing 737 MAX situation, Boeing is putting a temporary reduction on 787 production in place, down from the current 14 per month to 12. It envisages the drop to last for about two years from late 2020.
Putting a brave face on recent issues with 777X testing, Boeing says the long-haul workhorse is on track for first flight in early 2020. First delivery will now be early 2021.