Boeing Shares Climb Despite Biggest Profit Drop in 20 Years


The company has suspended new deliveries of the plane in the wake of the biggest crisis in its 103-year history.

The jet has been grounded since March after two crashes killed 346 people in Indonesia and Ethiopia.

"We recognize we have a lot of work to do", David Calhoun, who took over as Boeing's president and CEO this month, said in a statement. As a comparison, Boeing had posted a profit of $10.46 billion in 2018.

Calhoun rebuffed recent media suggestions that he was a Boeing "insider" ill-suited to introducing radical change, but acknowledged he had had a "front row seat" as a member of Boeing board for past 10 years and pledged to overhaul the company's culture.

Boeing, an icon in American manufacturing, suffered its first annual financial loss in more than two decades as the costs related to its marquee aircraft doubled to more than $18 billion after a pair of deadly crashes.

Airplane fuselages bound for Boeing's 737 MAX production facility sit in storage at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, on December 17, 2019. Meanwhile, Boeing had to suspend the manufacture of the planes, but it hopes production will be resumed in mid-2020 or even earlier. The stock has lost about a quarter of its value since early March 2019.

Deferred production costs also grew by US$2.6 billion, clipping the jet's long-term profit potential, Boeing said in a presentation Wednesday.

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He said: "We tried to do our best to let them be proud for our team, and I will try it again to push them to be with us as much as possible".

Boeing also announced that it would again cut back production of the 787 Dreamliner, a top-selling plane that has supported revenues during the protracted 737 MAX grounding.

The company originally planned to have the 777X ready for 2021 but questions remain about how much scrutiny the FAA and other aviation regulators will give the program. -China trade war. Boeing has already cut production of that jet - leading to a slowdown in the amount of cash coming through the door.

The aerospace giant reported a $1 billion loss in the fourth-quarter and a loss of $636 million for all of 2019, the company's first year in the red since 1997.

"We're engaged at all tiers of the supply chain and have been for quite some time", Greg Smith, Boeing's chief financial officer and executive vice-president of enterprise performance and strategy, added during the call.

The Chicago-based company booked another $9.2 billion in estimated current and future extra costs for production delays, deliveries, and compensation for airlines that have cancelled tens of thousands of Max flights.

USA airlines have taken the MAX off their schedules until early June and have said they need at least 30 days after FAA approval to prepare their jets and train pilots.