Boeing Co, Wednesday, swung to its first annual loss since 1997 on mounting 737 MAX costs and indicated it would again cut production of its bigger 787 Dreamliner aircraft, currently its main source of cash.
Costs related to the global grounding of Boeing’s once fast-selling 737 MAX reached $14.6 billion in 2019 and the planemaker warned of another $4 billion in charges in 2020 due to the expense of freezing and slowly restarting the jets’ production.
Boeing, facing the biggest crisis in its history, had previously estimated an around $8 billion price tag for the MAX fallout.
The aircraft was grounded in March after two crashes that killed 346 people. Boeing has since frozen production of the aircraft as deliveries, the moment when the planemaker receives most of its cash, remain halted.
“We recognize we have a lot of work to do,” Boeing President and CEO David Calhoun said in a statement. His predecessor, Dennis Muilenburg, was ousted last year.
Boeing shares opened 3% higher, as some analysts had expected an even larger charge for 737 MAX costs. The stock has lost about a quarter of its value since early March 2019.
“Boeing faces some considerable challenges in the near-term, but we expect the market to focus on the level of free cash flow that the company can generate in the early-2020s on a sustainable basis, once the MAX returns to service,” Redburn analyst Jeremy Bragg said.