Profit flat as Southwest takes $175 million hit from Max jet

Profit flat as Southwest takes $175 million hit from Max jet

Boeing is reporting a second quarter loss of $2.94 billion a week after saying problems with its advanced 737 Max jet will set the company back at least $5 billion.

"We are continuing to produce at 42 aircraft per month and we will continue to evaluate potential future reductions in the production rate, including a temporary shutdown in 737 production", the company said in an statement of accounting for its second quarter filed with the U.S. Securities and Exchange Commission (SEC) on Wednesday.

Southwest Airlines said it is planning to take the planes off schedules through January 5, ending hopes that it would be ready to fly for the winter holidays and forcing the company to scramble during the busiest flying season of the year. Then, in March, another Max 8 crashed under similar circumstances, killing 157 people.

"Based on the most recent guidance from Boeing, we now are assuming regulatory approval of MAX return to service during fourth quarter 2019".

The three USA airlines that fly the Max - Southwest Airlines, American Airlines and United Airlines - have canceled thousands of flights into November, depressing their revenues.

Chief Executive Officer Gary Kelly has been expressing rising frustration because of the beleaguered Max, telling employees this week that the longer the grounding goes on, the harder it becomes to manage.

"We have not reached any conclusions regarding these matters, and no amounts from Boeing have been included in our second quarter results", he said.

American updated the figure as it announced that second quarter profit rose 19% to $662 million.

Newark service will stop November 3, the company said.

Although a further delay of the MAX's return to service will be disappointing to Boeing, it sounds like Southwest are planning well to manage expectations of their passengers. Boeing is using Moses Lake, Washington, and San Antonio, Texas as its two main remote storage locations for its 737 MAX aircraft.

The Boeing 737 MAX was grounded by regulatory authorities across the world in March after the aircraft suffered 2 crashes in which everybody on board the aircraft was killed. Boeing is looking to restore customers' faith in its 737 MAX and to satisfy the requirements of regulators by reprogramming the software pinpointed as a common factor in two deadly crashes in the span of five months.

The Boeing's plane grounding has caused airlines including American, United and Southwest to cancel thousands of flights into early November. The FactSet consensus was for EPS of $1.34 and revenue of $5.936 billion. Subject to governmental approval, they are hoping to launch Cozumel as their fourth Mexican destination in the first quarter of 2020. Muilenburg said the company is making progress on building the business case for NMA, but getting the MAX flying commercially remains its "top priority".

Shares of American Airlines Group Inc. fell $1.14, or 3.3%, to $33.45 in morning trading. That trend is expected to continue in the third quarter, they said.

Boeing to take $US4.9 billion charge for MAX fiasco.



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