General aviation

Boeing feels pain of Max groundings

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An Air Canada Boeing 737 Max 8 departs Vancouver International Airport in March (photo: Brett Ballah).

The grounding of Boeing 737 Max aircraft around the world has left a dent in Boeing corporate earnings, and the company reported in its first-quarter financial results Wednesday.

Boeing’s net earnings fell 13% in the first three months of 2019, a dramatic decline to $2.1 billion from $2.5 billion the year before.

Stung by its initial handling of the Max crisis, the fastest-selling aircraft in the storied history of Boeing, the company has cut production of the aircraft to focus on getting the Max back in the air, and restoring consumer confidence.

The Max were grounded after a pair of crashes less than five months apart. An onboard computerized flight control system is being investigated as a likely contributing factor in both crashes. While regulators in North America were slower than their counterparts elsewhere, the plane was finally grounded around the world March 13.

Boeing said it made steady progress on final certification for a software update for the 737 MAX, with over 135 test and production flights of the software update complete.

“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,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg.  He said the crisis has affected the company more than any other event in his 34 years at the company.

“Our work demands the utmost excellence,” he said in a conference call with investors.

90% of airlines have participated in simulator with software upgrades

Muilenburg did not give a timeline for a return of the Max to service, saying the company would work with regulators to re-certify the type.

“We deeply regret the impact this has created,” said Muilenburg.

The company expects earnings to be depressed until the crisis is resolved, and the Max is back in the air.

In Canada, 41 Max planes were grounded, four with Sunwing, 24 with Air Canada, and 13 with Westjet. The airlines have all had to juggle their schedules, defer non-essential maintenance and keep older aircraft in the air, just to maintain operations. A handful of services have also been cancelled.

As a result of the grounding, Boeing said it delivered 50 fewer aircraft than planned in the quarter. In all, Boeing delivered 149 aircraft in the first quarter of 2019, and had an order backlog of 5,605 aircraft, worth $399 billion.

BELOW: A map of planned 737 Max 8 operations by Air Canada and Westjet March 13, 2019, the day Max aircraft were grounded by Transport Canada.

Boeing said the pain of the Max crisis was offset by strong sales in its widebody operations – the company recently boosted 787 Dreamliner production from 12 per month to 14 – and defence sales.

The company also rolled out a new 777X test bed in the quarter, with first revenue service scheduled in 2020. British Airways parent IAG ordered 18 of the type in the first quarter.

In the future, Boeing sees a market of 42,730 airplanes in the next 20 years, and a total aerospace market worth more than $8.1 trillion. That market will be split almost evenly between orders to grow airline fleets, and to replace older aircraft.

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