Boeing to take a $4.9 billion charge over grounded jet

Southwest Airlines pushed back its timeframe for returning the 737 MAX to service citing regulatory uncertainty

Southwest Airlines pushed back its timeframe for returning the 737 MAX to service citing regulatory uncertainty More

The manufacturer said the charge would result in a $US5.6 billion reduction of revenue and pre-tax earnings in the second quarter.

According to a report on CNBC, the charge is an estimate of concessions for customers who have been left to fly planes that are not as fuel-efficient as the 737 Max during the busy summer season and through the fall with essentially no end in sight.

This is the first full quarter since the grounding of the brand new 737 MAX planes. two of which fell out of the sky, killing all its passengers.

But the statement added: "This assumption reflects the company's best estimate at this time, but actual timing of return to service could differ from this estimate". The increased 737 program costs will reduce the margin of the 737 program in the second quarter and in future quarters.

CFRA Research analyst Jim Corridore said putting a figure on airline compensation and the potential return of the plane in the fourth quarter provided important clarity around the damage inflicted by the grounding.

It comes as the company reels from two major 737 Max aircraft disasters which killed all passengers onboard, a total of 346 passengers and crew. A single sensor on the outside of the plane was used by this software, which was implicated in both deadly crashes.

Boeing did not specify which airlines would be receiving what compensation.

"We are taking appropriate steps to administer our liquidity and extend our balance sheet flexibility the appropriate intention that you just would possibly per chance name to mind as we're working by means of these challenges", Boeing chief monetary officer Greg Smith talked about in an announcement.

"The Max grounding presents significant headwinds and the financial impact recognised this quarter reflects the current challenges and helps to address future financial risks", Chairman and CEO Dennis Muilenburg said in a statement.

Dallas-based Southwest (LUV) said on Thursday it would schedule without the 737 MAX until November 2, a decision that proactively removes about 180 daily flights from its schedule, more than the 150 daily flights it was removing through early October.

Boeing climbed 1.9 percent to US$367.95 after the close of regular trading in NY.

The US Federal Aviation Administration late last month identified a fresh problem with the 737 MAX during simulator testing, further clouding the outlook for the plane's return to service.

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