US top aircraft manufacturer Boeing Company has posted a loss of about $3 billion in earnings for the second quarter of 2019.
This, the Company said on Wednesday, was as a result of the global grounding of 737 MAX airplanes.
Boeing said its quarterly revenue nosedived by 35 per cent to reach $15.8 billion, compared to $24 billion in the same period of 2018.
The Company said its best-selling 737 MAX jets remained grounded globally since mid March 2019 over the two deadly crashes that killed 346 people in Indonesia and Ethiopia.
The company said the second-quarter revenue of $15.8 billion and GAPP loss of $5.21 per share reflected the previously announced 737 MAX charge.
The charge that cut revenue by $5.6 billion and earnings by $8.74 per share.
Boeing said in July that it would take $4.9 billion in after tax charge to cover possible compensation to airlines that have canceled thousands of flights of the 737 MAX jets, two of which crashed in Indonesia in October and in Ethiopia in March 2019.
Boeing said its Q2 revenue loss was partially helped by better operations earnings from its defence, space, security and service business.
This has increased 159 per cent to hit $975 million, compared to $376 million in the same period a year before.
The company’s defence sector generated $6.6 billion in revenues for the quarter, up to 8 per cent from the figure of $6.1 billion in 2018.
Meanwhile, Boeing’s commercial sector yielded only $4.7 billion in revenue for the second quarter, falling sharply by 66 per cent from $13.95 billion posted in the corresponding period of 2018.
Boeing delivered 90 commercial airplanes for the second quarter, down with 54 per cent compared to the figure of 194 in the same period of 2018.
It said the company had made no delivery of any 737 MAX planes for this quarter.
Boeing CEO Dennis Muilenburg said on an earnings call on Wednesday that the company would consider cutting 737 MAX output to a level below the current rate of 42 aircraft per month.
He also added that temporarily it would suspend its production if the plane’s return to service is further delayed.
Boeing announced in April that the monthly production of 737 MAX was reduced from the rate of 52 to 42 airplanes after the second air crash in Ethiopia.
Boeing said previous 2019 guidance did not reflect the impact of the 737 MAX groundings.
However, a new guidance will be issued at a future date due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet.
The US airplane maker said it is working closely with US federal regulators on the process they have laid out to certify the 737 MAX software update.
“With a clear focus on our values, we are delivering for our customers, working to safely return the 737 MAX to service and capturing new opportunities,” Muilenburg tweeted on Wednesday