Boeing announces $3bn losses amid 737 MAX crisis

Yesterday, Boeing posted the largest loss in its history, with the American manufacturer losing an adjusted $3.7bn (£2.96bn) in the second quarter ending June. The loss comes as the 737 MAX approaches its fifth month of worldwide grounding, following two crashes which killed hundreds of people, the cause of both being attributed to the MAX’s MCAS anti-stalling software.

The earnings call highlighted the impact to Boeing of the MAX grounding, as the company reported losses of $2.9bn (£2.3bn), compared to a $2.2bn (£1.8bn) profit in the same period last year. The financial losses for the company exclude the cost of litigation related to the Lion Air and Ethiopian Airlines crashes.

In a statement, Boeing CEO Dennis Muilenburg noted that any further delays to approval could result in a further slowdown of production rates, or even of a temporary shutdown altogether. He said that this was not something Boeing wants to do, but “an alternative that we have to prepare for … to make sure we’ve covered all scenarios.”

Boeing has already cut the rate of production as a result of the grounding. In April, the manufacturer slowed production by around 20% to just 42 aircraft a month.

Despite continuing to maintain this reduced production rate, the grounding of MAX aircraft has meant that numerous planes have started piling up outside the production facility in Renton, as well as in another Boeing storage facility in Texas.

Boeing is currently testing a software fix to the MCAS system, though the final software package is yet to be submitted to the FAA, it said. The FAA and foreign aviation authorities are also yet to announce the process for certifying the new software and the process for training flight crews about it, the steps that could lead to the lifting of the grounding.

As it stands, the 737 MAX is likely to remain grounded for some time yet. Indeed, in the past few weeks, multiple airlines across the US announced plans to extend cancellations of MAX-scheduled flights until the autumn.

Should Boeing submit a fix by the end of the summer, it will likely take a couple of months for the FAA and global regulatory agencies to re-certify the plane. From then, it depends on the needs of these agencies to ensure safety and confidence in the 737 MAX. For now, it is simply a waiting game for airlines and passengers until the software fix gets the green light.