Boeing’s First Earnings Report After 737 MAX Grounding Says Little About Its Return
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Boeing has issued its first earnings report since grounding its fleet of 737 MAX aircraft in March 2019. The company not only missed Wall Street’s estimates, but it failed to shed any meaningful light on when the world would see the aforesaid fleet back in the sky.
“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg said. “As we work through this challenging time for our customers, stakeholders and the company, our attention remains on driving excellence in quality and performance and running a healthy sustained growth business built on strong, long-term fundamentals.”
United, who happens to be unveiling a new livery today, has removed the MAX from its schedules through June 5. While Boeing’s earnings did little to provide anything more concrete, it did ask investors to toss its previously issued 2019 financial guidance. “Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet,” said the company, “new guidance will be issued at a future date.”
Said another way, the implications of the 737 MAX grounding remain to be fully realized.
The numbers thus far aren’t exactly pretty, either. Boeing reported an 18% drop year over year in earnings from operations on a GAAP basis, with net earnings falling 13%, earnings per share falling 10% and operating cash flow dipping 11%.
After shattering commercial airplane delivery records in 2018, Boeing handed over just 149 commercial planes in Q1 2019 — a 19% drop from the 184 it delivered in Q1 2018. Boeing specifically stated that its commercial airplanes division saw first quarter revenue of $11.8 billion, “reflecting lower 737 deliveries partially offset by favorable mix.” On the bright side, it did notch orders for 18 777X airplanes for British Airways parent company IAG, 20 787 airplanes for Lufthansa, and 10 787 airplanes for Bamboo Airways (a new Vietnamese airline that TPG‘s JT Genter flew earlier this year).
Boeing has been under increased scrutiny following the 737 MAX crash of Ethiopian Airlines Flight 302 on March 10, 2019, which showed similarities to the Oct. 29, 2018 crash of Lion Air flight 610. Preliminary evidence seems to indicate a similar problem in both accidents, related to a new flight-control system that was installed for the first time on the MAX version of the Boeing 737. Boeing affirmed in its Q1 2019 results that it has completed over 135 test and production flights of the software update, signifying “steady progress on the path to final certification.”
Despite the grounding, investors seem to believe that Boeing’s long-term prospects remain solid, likely due to customers having little choice beyond Airbus and Boeing when it comes to purchasing commercial jets. Boeing’s stock rose nearly $5, or 1.26%, in premarket trading.
For the latest travel news, deals and points and miles tips please subscribe to The Points Guy daily email newsletter.
Featured image of a United 737 MAX 9 by Zach Honig/TPG.
Welcome to The Points Guy!
Earn 90,000 bonus miles after you spend $3,000 in purchases within the first three months of card membership. Plus, earn a $200 statement credit after your first Delta purchase within the first three months. Offer ends 7/28/21.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles after spending $3,000 in purchases on your new Card in your first 3 months and a $200 statement credit after you make a Delta purchase with your new Card within your first 3 months. Offer expires 7/28/2021.
- Limited Time Offer: Plus, get a 0% intro APR on purchases for 12 months from the date of account opening, then a variable 15.74%-24.74%. Offer expires 7/28/2021.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees