Boeing reveals fresh MAX crisis earnings slump and fires plane boss

23 October 2019, 07:59 | Updated: 23 October 2019, 18:35

Boeing has said it is hopeful of bringing its beleaguered 737 MAX commercial plane back into production by the end of the year, after the model was grounded by US regulators in March.

But the world's biggest aircraft producer conceded that the decision on the plane's return lay with the Federal Aviation Administration (FAA).

Speaking during an analysts and shareholders conference after markets opened on Wednesday, Boeing's chief financial officer Greg Smith said: "Ultimately it will be on their timeline."

He confirmed Boeing had made no further provision for the cost of the MAX problems in the last quarter to September 30, but added that this "didn't mean we won't in the next."

In terms of the 737 MAX being airborne again, chief executive Dennis Muilenberg said it will be a "multi-quarter" effort, after the completion of software updates and testing as well as training, the timeline of which has slipped from September.

All versions of the 737 MAX aircraft were grounded in March - days after an Ethiopian Airlines jet came down outside Addis Ababa and five months after a Lion Air flight suffered a similar fate in the Java Sea.

A total of 346 people died.

So far, the flight ban has cost Boeing around $8bn (£6.2bn).

Before markets opened Boeing revealed a slump in third quarter revenues and profits, hours after it ousted the head of its commercial planes division amid the continuing 737 MAX crisis.

The company told investors that the grounding of the MAX fleet eight months ago, following a second fatal crash involving the aircraft, had continued to hit production and order levels in its third quarter.

It reported a 21% slide in group revenues while profits halved on the same period last year to $1.2bn. It made just 62 commercial aircraft over the three months - down from 190 between July and September in 2018.

Shares were up 3.2% in early trading.

It was following a board meeting on Tuesday night that the shock departure of commercial planes chief Kevin McAllister was announced.

The company gave no explanation for Mr McAllister's departure but he is understood to have taken the post late in the development of the crisis-hit MAX.

The Reuters news agency reported that an insider had described him as a "scapegoat" though sources also suggested several issues facing the division formed part of the decision.

An interim report by Indonesian investigators, disclosed to the families of the 189 victims of the Lion Air crash and released on Wednesday, said that mechanical and design issues contributed to the disaster last October.

Boeing has been frantically working to update an anti-stall device on the 737 MAX called the Maneuvering Characteristics Augmentation System (MCAS) and a number of other functions in the hope of returning the planes to service.

But the pace has been far slower than the company hoped - costing the firm dearly in terms of lost production and delayed deliveries.

It is facing a multi-billion dollar bill in compensation from customers, including Ryanair, which see the planes as being crucial to growth plans and the modernisation of fleets to bring down fuel bills.

The US Federal Aviation Administration announced on Tuesday that while Boeing was making progress toward winning approval to resume flights, the firm would need "several weeks" before a key certification test flight can take place.

Pilots would then need to be re-trained - assuming the planes meet regulatory requirements globally.

The company said on Wednesday it remained on track to gain regulatory approvals by the year's end.

It said: "Boeing has developed software and training updates for the 737 MAX and continues to work with the FAA and global civil aviation authorities to complete remaining steps toward certification and readiness for return to service.

"These regulatory authorities will determine the timing and conditions of return to service in each relevant jurisdiction."

Mr Muilenburg, who was stripped of his dual title of chairman last month, is due to give evidence on the MAX crisis to a Congressional hearing next week.