SEATTLE — The 737 Max crisis slashed Boeing’s third-quarter profit in half compared with a year earlier, but the company absorbed the financial hit without any additional write-offs to cover the expenses of compensating customers and continuing to build 737 jets that it cannot deliver.
However, Boeing added $900 million to its estimated costs for producing the 737, due to the extended reduction in the production rate during the grounding. That will reduce the 737’s profitability and cash flow in future quarters and brings Boeing’s estimated cost of the Max grounding so far to $9.2 billion.
Boeing also announced other negative news affecting the larger widebody jets built at its Everett plant: because of a rapidly shrinking order backlog on the 787 Dreamliner, Boeing will cut production of that jet at the end of 2020 from 14 to 12 jets per month.
And after delays in development of the new 777X airplane, first delivery is pushed out from next year into “early 2021.”
In a statement early Wednesday announcing its earnings figures, Boeing said it assumes that it will get regulatory approval for the 737 Max’s return to service by the end of the year and that it will gradually increase the 737 production rate next year, from 42 to 57 jets per month by late 2020.
Ahead of a teleconference with analysts and the press, Boeing CEO Dennis Muilenburg said in a statement that “our top priority remains the safe return to service of the 737 Max, and we’re making steady progress.”
“We’ve also taken action to further sharpen our company’s focus on product and services safety,” he said.
Although Muilenburg three months ago spoke of the possibility of shutting down for a period the 737 final assembly factory in Renton if there was a further delay in getting the Max back in service, the company is holding off on such a drastic action, which is not expected unless regulatory approval slips again into next year.
Boeing’s financial results show a profit of $1.2 billion, or $2.05 per share, on revenue of $20 billion in the third quarter.
That’s compared with a profit in the same quarter a year ago of $2.4 billion, or $4.07 per share, on revenue of $25 billion.
