BOEING HAS ANNOUNCED that it has set aside $4.9 billion in one-time costs to compensate airlines for disruptions due to the grounding of the 737 MAX aircraft.

The manufacturer announced that earnings this quarter would be dented by the significant cost and that profits will also be weighed down by another $1.7 billion in costs due to the 737 MAX’s lower production rate. 

The disclosures demonstrate the increasing financial toll that the 737 MAX crisis is taking on the company. 

All Boeing 737 MAX planes were grounded by aviation authorities after two fatal crashes involving the 737 MAX 8 edition of the aircraft – one with Indonesian Lion Air and another with Ethiopian Airlines.

The disasters have tarnished Boeing’s reputation and sparked numerous lawsuits from the families of victims.

Boeing said yesterday that its “best estimate” is that the planes will return to service “early in the fourth quarter”.

“We remain focused on safely returning the 737 MAX to service,” said Boeing chief executive Dennis Muilenburg. ”This is a defining moment for Boeing.”

“The MAX grounding presents significant headwinds and the financial impact recognized this quarter reflects the current challenges and helps to address future financial risks.”

The company last month announced it would give $100 million to communities and families affected by the 737 MAX disasters.

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.

The FAA “is following a thorough process, not a prescribed timeline, for returning the Boeing 737 MAX to passenger service”, an agency spokesman said. “The FAA will lift the aircraft’s prohibition order when we deem it is safe to do so.”

Earlier this month, Ryanair said it would be forced to make cuts to its winter 2019 and summer 2020 schedules due to delays in the delivery of the new Boeing aircraft. 

© – AFP 2019