Boeing to record $4.9B or $8.74 per share Q2 charge on 737Max grounding
Boeing will record an after-tax charge of $4.9B or $8.74 per share in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays. This charge will result in a $5.6B reduction of revenue and pre-tax earnings in the quarter. While the entire estimated amount will be recognized as a charge in the second quarter, the company expects any potential concessions or other considerations to be provided over a number of years and take various forms of economic value. Additionally, Boeing's estimated costs to produce the aircraft in the 737 accounting quantity increased by $1.7B in Q2, primarily due to higher costs associated with a longer than expected reduction in the production rate. The increased 737 program costs will reduce the margin of the 737 program in Q2 and in future quarters. Boeing continues to work with civil aviation authorities to ensure the 737 MAX's safe return to service, and these authorities will determine the timing of return to service. For purposes of the second-quarter financial results, the company has assumed that regulatory approval of 737 MAX return to service in the U.S. and other jurisdictions begins early in Q4 of 2019.