Boeing today reported its first annual loss in more than two decades as the lengthy grounding of the 737 MAX undercut the company's revenues and exploded costs.
The aerospace giant reported a $1 billion loss in the fourth quarter and a loss of $636m for all of 2019, the company's first year in the red since 1997.
Newly-installed chief executive David Calhoun, who took the reins this month to stabilise the situation, pledged to turn the company around even as Boeing disclosed $9.2 billion in new costs connected to the MAX.
Some analysts had expected new costs twice as high, and despite the hefty charges, Boeing shares rallied in early trade on Wall Street.
The MAX has been grounded since March following two crashes that killed 346 people and which opened the doors to intense scrutiny of Boeing's safety practices - and regulatory oversight of its productions.
Bruising congressional investigations have also revealed a troublesome culture at the aviation giant.
"We are committed to transparency and excellence in everything we do," David Calhoun said in a statement. "Safety will underwrite every decision, every action and every step we take as we move forward."
Mr Calhoun has been at the helm of Boeing only since January 13 after Dennis Muilenburg was sacked in December following criticism of his handling of the crisis, and immediately after damning internal communications were released.
Calhoun is targeting mid-2020 to win approval from aviation regulators to resume flights on the MAX, which is seen as a realistic timeframe after Muilenburg repeatedly pushed a more optimistic schedule.
Calhoun said that he was "confident as a CEO can be" of the current timetable, adding that "we put together a schedule we think we can make."
The grounding of the MAX dented Boeing's earnings in multiple ways, halting deliveries of new planes to customers, a major source of revenue.
Boeing's revenues in the fourth quarter plunged 36.8% to $17.9 billion, while revenues for all of 2019 dropped 24.3% to $76.6 billion.
The crisis also prompted the manufacturer to first reduce and then halt production of the MAX until the crisis is resolved.
Boeing said today the changes in the production schedule added $2.6 billion in costs connected to airplane deliveries, plus another $4 billion in "abnormal production costs" primarily in 2020 associated with the suspension of the MAX and a "gradual resumption" of production.
The company set aside $2.6 billion to compensate airlines that have been forced to cancel thousands of flights due to grounded MAX planes and undelivered aircraft.
With these costs and expenses disclosed previously, the total impact on Boeing is $18.6 billion.
The MAX crisis also has weighed on numerous suppliers, such as Spirit AeroSystems, which announced earlier this month that it would lay off 2,800 employees in Kansas due to the production stoppage.
General Electric, which builds engines for the MAX, said the crisis lowered cash flow by $1.4 billion for 2019.
Boeing also said today that it would again cut back production of the 787 Dreamliner, a top-selling plane that has supported revenues during the protracted 737 MAX grounding.
The aerospace giant plans to cut production to 10 airplanes a month in early 2021 up to 2023 based on the "near-term market outlook," Boeing said.
The company in October had dropped production to 12 a month from 14 due to lower orders from China.
A note from JPMorgan Chase said Boeing's charges on the MAX were "worse than feared," although the company was expending cash at a faster rate than expected.
Boeing has reportedly lined up $12 billion in loans, but "balance sheet management" in 2020 will be an area for questions, the note said.
In another non-MAX development, Boeing set aside $410m to cover costs of an additional uncrewed mission after the December NASA flight did not reach the International Space Station.
"NASA is evaluating the data received during the December 2019 mission to determine if another uncrewed mission is required," Boeing said.
