Boeing 1Q earnings down on MAX grounding; full impact to come

April 24, 2019, © Leeham News: Boeing took a $1bn revenue hit in the first quarter ended March 31, following the grounding of the 737 MAX on March 13.

Earnings from operations reported today were off $525m; net earnings were down $328m.

The press release is here.

The stock market took the news in stride; pre-market trading saw Boeing stock rise more than $6 (1.66%) an hour before opening.

The MAX was grounding March 13, affecting only two weeks of the first quarter. The full impact is to come. As a result, Boeing suspended guidance for the year and will reissue it at a later date.

Cash flow

Cash flow, the key measure followed by the aerospace analysts, was off $348m. Dividends and stock buybacks completed before the grounding remained strong. Boeing took on $1bn in new debt.

Higher revenues from its defense and services units helped offset some of the revenue decline from the commercial airplanes unit.

Returning MAX to service

Boeing did not predict in its press release when the MAX will return to service.

“The previously issued 2019 financial guidance does not reflect 737 MAX impacts,” the company said it the press release. “Boeing is making steady progress on the path to final certification for a software update for the 737 MAX, with over 135 test and production flights of the software update complete. The company continues to work closely with global regulators and our airline partners to comprehensively test the software and finalize a robust package of training and educational resources.”

Earnings call

The 1Q earnings call is at 10:30am EDT. The link to listen is here. The PDF presentation is here.

1 Comments on “Boeing 1Q earnings down on MAX grounding; full impact to come

  1. Dropping from 5.58 to 3.30 in quarterly EPS with only a couple weeks of impact is going to really rattle the markets, I’d guess (although it’s about what was estimated here). This isn’t going to be easy, in cash flow, and that they are not even providing full year guidance even now speaks volumes.

    Analysts are presently predicting a 10 billion dollar impact to free cash flow this year. It is amazing that the much maligned (online, anyway) Max could (have been) be responsible for that much.

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