- 21st July 2019
- Posted by: Hakeem
- Categories: Business plans, Finance & accounting
- The 737 Max grounding has led airlines to cancel thousands of flights during the busy summer travel season.
- Regulators haven’t said when they expect the planes to fly again.
- The worldwide grounding is now in its fifth month and was ordered after two fatal crashes.
The worldwide grounding of Boeing 737 Max planes is now in its fifth month and disruptions to air travel are set to continue for several months more.
Aviation regulators haven’t said when they might allow the 737 Max to fly again. They grounded the planes across the globe in mid-March after two fatal crashes — one in Indonesia in October and another in March in Ethiopia— killed a total of 346 people.
With the planes out of service, airlines that have the jets in their fleets have cancelled thousands of flights during peak travel periods. More cancellations are ahead in the coming months with no guarantee the planes will be airborne again by the end of the year.
Only in service for a little over two years, the Boeing 737 Max is more fuel-efficient version of the workhorse single-aisle plane that has been in service since the 1960s. It’s the plane maker’s best-ever selling aircraft. Investigators in the two crashes have implicated a piece of automated flight-control software in both air disasters and though Boeing has developed a fix, it hasn’t yet been submitted to regulators as the crisis wears on for months longer than airlines expected.
Boeing told investors on Thursday that it expects a $5.6 billion pre-tax earnings hit in the second quarter. It’s taking a $4.9 billion after-tax charge in the three-month period to account for concessions to its Max customers, set to swing it to a loss. It warned that its 737 Max production costs rose by $1.7 billion in the three months ended June 30. That amount doesn’t include potential payouts from the multiple lawsuits that Boeing is facing over the crashes.
Boeing said it’s assuming the planes will return to service early in the fourth quarter but warned that the “actual timing of return to service could differ from this estimate.”