Boeing to take a USD4.9 billion charge over grounded jet

DALLAS (AP) — Boeing said on Thursday it is booking a USD4.9 billion charge to cover possible compensation to airlines that have cancelled thousands of flights since the 737 Max jet was grounded after two deadly accidents.

The airplane builder also said the Max-related fallout will cut USD5.6 billion from its revenue and pre-tax earnings in the April-through-June quarter.

The Chicago-based company said the calculations were based on an assumption that regulatory approval for the plane’s return to flying will begin early in the fourth quarter.

That timing is earlier than some analysts expected and may have contributed to a rally in Boeing shares in after-hours trading. Boeing is scheduled to report its quarterly results next week.

Boeing also raised its estimate of Max production costs by USD1.7 billion because output will be curtailed longer than expected.

Boeing is still working on fixing flight-control software that appeared to play a role in crashes that killed 346 people off the coast of Indonesia and in Ethiopia. In March, regulators grounded the Boeing 737 Max and the company suspended deliveries of new jets.

The USD4.9 billion charge does not include amounts that Boeing may pay in the dozens of lawsuits filed by families of crash victims. Boeing this week hired a victims-compensation expert to oversee a USD50 million relief fund for families, which the company said was separate from the lawsuits.

A worker walks next to a Boeing 737 MAX 8 airplane parked at Boeing Field in Seattle. – AP