By Ankit Ajmera
(Reuters) – Boeing (NYSE:) Co on Wednesday abandoned its 2019 financial outlook, said it halted share buybacks in mid-March, and announced $1 billion in increased costs due to the grounding of its 737 MAX jets.
Chicago-based Boeing is facing one of the biggest crises in its history following crashes involving its fastest-selling jetliner, one on Lion Air in Indonesia on Oct. 29 and another on Ethiopian Airlines on March 10, which together killed all 346 on board.
The world’s largest planemaker reported first-quarter revenue and cash flow below sharply lowered Wall Street estimates, largely due to stopping deliveries of the 737 MAX jets, which were grounded in March after the two crashes.
The crashes caused regulators worldwide to ground the 737 MAX and triggered investigations into the aircraft’s development by federal transportation authorities and the U.S. Department of Justice.
Although safety experts have raised some questions over crew performance in both crashes, the regulatory fallout has been dominated so far by questions over anti-stall software known as MCAS, which Boeing has acknowledged was a common link in the separate chains of events leading to both crashes.
Boeing cut production of the jets following the crashes to 42 aircraft per month, down from 52, and its operating cash flow in the first quarter was around $350 million lower than a year earlier.
Boeing also said it booked unspecified charges related to developing a fix for MCAS and pilot training, and was making steady progress toward certification of the software after completing more than 135 test and production flights.
The company said it would be issuing a new forecast in the future when it has more clarity around the issues surrounding the 737 MAX.
First-quarter operating cash flow declined to $2.79 billion, from $3.14 billion, missing the Wall Street’s average estimate of $2.82 billion.
Revenue fell 2 percent to $22.92 billion, below analysts’ average estimate of $22.98 billion.
Excluding certain items, Boeing said its core earnings fell to $3.16 per share, in the quarter from $3.64 per share, a year earlier. That matched analysts’ average estimate.