Boeing Co plans to report a US$4.9 billion accounting charge with its second-quarter results next week, a sign of the widening financial toll from the company’s beleaguered 737 MAX jetliner.
The after-tax write-down, equivalent to US$8.74 per share, covers potential concessions and considerations for airline customers who have been forced to cancel flights and line up replacement aircraft as the MAX’s grounding enters its fifth month, Boeing said in a statement on Thursday.
The costs would clip US$5.6 billion from revenue and pretax earnings in the quarter.
The assumptions behind the accounting charge also provided a glimpse of Boeing’s recovery plan for its best-selling jet, which crashed twice in a five-month span and engulfed the US planemaker in one of the worst crises of its century-long history.
The company estimated that the MAX would be approved to return to service in the US and other countries beginning “early in the fourth quarter,” easing fears that the timetable would slip to next year.
“This is a defining moment for Boeing,” chief executive officer Dennis Muilenburg said in the statement. “Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes. The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”
Boeing climbed 1.9 percent to US$367.95 after the close of regular trading in New York.
Since the March 10 crash of an Ethiopian Airlines 737 MAX 8 jet, Boeing has dropped 15 percent, the biggest decline on the Dow Jones Industrial Average.
While Boeing warned that the timing of a return to service could change, the estimate of fourth-quarter approval was in line with schedule changes by the model’s US operators.
United Airlines Holdings Inc, American Airlines Group Inc and Southwest Airlines Co have removed the airplane from their schedules through early November.
The fourth-quarter time frame also rebuts a Wall Street Journal report suggesting that initial flights would slip to next year.
“While it’s still fluid, Boeing must have a decent handle on it or they wouldn’t have thrown a date out there,” Bloomberg Intelligence analyst George Ferguson said.
“I have to think they are far enough along in the process that they feel they understand everything the FAA needs,” he said, referring to the US Federal Aviation Administration.
Boeing’s calculations also assume that production of its 737 jetliners would gradually build to 57 per month next year, earlier than some analysts have estimated.
Aircraft produced during the grounding, and already included in the company’s inventory, would be delivered “over several quarters” once the MAX is cleared to fly, the company said.
More than 500 of the aircraft are stored around the globe, including about 150 newly built models that Boeing cannot send to airlines while MAX flights are halted.
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
RSS