Boeing takes 737 MAX charge, Q2 revenue down 35 per cent
The Boeing Company today reported second-quarter revenue of US$15.8 billion, a decrease of 35 per cent from the corresponding quarter in 2018, which generated revenue of US$24.3 billion. The sharp revenue reduction reflects the company taking a charge relating to the 737 MAX grounding, as well as lower 737 deliveries, which alone accounted for a US$5.6 billion revenue decrease in its 2019 second quarter.
For the first half of its 2019 financial year, Boeing saw its revenue decrease by 19 per cent, from US$47.6 billion in the first six months of 2018 to US$28.7 billion in the first six months of 2019.
Boeing plans to issue a new financial guidance for 2019, without specifying when that will be because of the uncertainty of the timing and conditions for the return to service of the 737 MAX fleet. The company continues to describe the 737 MAX return as hinging on the FAA certifying a software update. Regulatory authorities, including Transport Canada, will determine their own process for certifying the MAX software and training updates before lifting the grounding order.
“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,” said Dennis Muilenburg, CEO, Boeing.
Second-quarter revenue for Boeing’s Commercial Airplanes segment was US$4.7 billion, dropping from US$14.0 billion in the corresponding 2018 quarter – a decrease of 66 per cent. Boeing delivered 90 commercial airplanes in Q2 2019, a decrease of 54 per cent from the 190 aircraft delivered in Q2 2018. The 90 aircraft delivered in this year’s quarter includes 42 787s, which helped offset losses, and captured orders for two 777 freighters for DHL and six 767 freighters for FedEx.
Boeing is still targeting late-2020 for the first delivery of its new-generation 777X, but describes a significant risk to meet this schedule given engine challenges, which are delaying first flight until early 2020. The company’s Commercial Airplanes backlog, as of the second quarter 2019, is at 5,500 airplanes valued at US$390 billion.
Boeing notes the 737 MAX charges in Q2 2019 were partially offset by higher defense and services volume. In its Defense, Space & Security segment, second-quarter revenue increased eight per cent relative to Q2 2018, reaching US$6.6 billion this year primarily based on higher volumes across derivative aircraft, satellites and weapons.
The company’s Global Services segment in Q2 2019 saw a revenue increase of 11 per cent relative to Q2 2018, as revenue in this year’s quarter reached US$4.5 billion, primarily driven by the acquisition of Boeing Distribution Services Inc. (formerly KLX) and higher international government services volume.