Boeing takes $1.5 billion hit over 737 Max crashes

The aerospace giant said profit fell by a fifth in the three months to March. Photo / Bloomberg

Boeing has taken a US$1 billion ($1.5b) hit in the wake of the 737 Max crashes and groundings and scrapped profit forecasts for the year.

The aerospace giant said profit fell by a fifth in the three months to March as the fallout from two crashes by the bestselling airliner weighed on results.

Abandoning its full-year financial forecasts as a consequence of the disruption, Boeing said the guidance "does not reflect the 737 Max impacts... due to the timing and conditions surrounding the return to service of the 737 Max fleet".

Revenue slipped 2 per cent to US$22.9b, but core operating profits fell just over a fifth to almost US$2b in the quarter.

Boeing's commercial aeroplanes -division - its biggest unit - reported a US$1.1b drop in revenues to US$11.8b. The company also booked US$1b of charges on the cost of building the 737 Max during the quarter, with production being cut by a fifth to 42 aircraft a month in the wake of the crashes.

Costs also included maintaining staff levels despite Boeing churning out aircraft that cannot be delivered to customers until it is certified as safe to fly again, along with storage costs for them.

The almost 400 737 Max airliners Boeing has delivered to airlines were grounded in mid-March, days after the Ethiopia Airlines crash killed all 157 people on board.

The plane was lost just five months after another 737 Max operated by Lion Air crashed in similar circumstances off Indonesia, with the loss of 189 lives. Both aircraft went through a series of rapid climbs and dives before crashing. This led investigators to focus on 737 Max's "MCAS system", which automatically pushes the nose down to offset a handling characteristic that causes the aircraft to pitch up, potentially causing it to lose lift and stall.

Alongside the results Boeing updated on a software fix the company hopes will get the 737 Max flying again.

Chief executive Dennis Muilenburg said the company was "making steady progress" on a fix, adding that Boeing's "first order of business is the safe return to service of the 737 Max. All at Boeing have been deeply affected by the recent accidents... which have intensified our commitment to design and build the safest aircraft in the sky."

The Boeing boss said it will "take time" to rebuild airline and passenger confidence in the 737 Max, while the company had to "earn and re-earn the trust of customers, regulators and the flying public".

Boeing underlined its financial strength, saying it had a US$487b backlog of work including 5,900 airliners, and held marketable securities of US$7.7b.

Shares in Boeing rose by as much as 1 per cent in New York last night.